FOMC Minutes Are Released at 2 PM Today

OFX Daily Market News

Posted by OFX

  United States Dollar

The Greenback fell yesterday against its major rivals on the back of a combination of broad US dollar weakness and soaring US equities. US equities hit an all-time high for the first time since January 26 which was led by technology and utility companies, the benchmark S&P 500 index traded up 0.6% to 2,872.93. US equities, equaling the longest-ever bull run, has been supported this year by strong earnings growth.

FOMC minutes of the Fed’s last policy meeting are released today at 2 pm. With two rate hikes already put in place this year by the Fed and the recent criticism from President Trump on Fed Chair Jerome Powell’s tightening policy, market participants are keen on receiving clues to the tightening path the Fed will take. Chair Powell speaks at the Jackson Hole Symposium on Friday; the symposium is a gathering on global central bankers. This year theme at the symposium is the economic impact of superstar firms like Amazon.

From a technical perspective, the EUR/USD pair extended its Trump-triggered rally to a high of 1.1600, its highest in over a week. The USD/JPY pair also traded higher reaching an overnight high of 110.54. Despite concern fears of a no-Brexit deal, the Pound Sterling rallied to a high of 1.2924 against the US dollar.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3001– 1.3171

The Canadian Dollar enjoyed a mostly quiet day on the economic calendar yesterday, with little to excite markets except for the Bank of Canada’s Wilkins speech. Wilkins outlined growing confidence in the macroprudential measures which she suggests, has improved the quality of household debt. However, she also cautioned that higher debt levels would mean a more significant impact from rate hikes, perhaps tempering her earlier comments on improved household debt. The Loonie shifted slightly on the back Wilkins comments although the most significant gains were to come from the repercussions of President Trump comments. The on-going criticisms of the Federal Reserve took the shine off the greenback and saw it plummet across the board. Risk-sentiment shifted off-shore with the loonie being a primary benefactor.

The Canadian dollar moved through the first support of 1.3029 but can’t seem to run past the psychological support backing of 1.30 to test second support of 1.2987. Resistance levels sit at 1.3042 the overnight high and 1.30719. Canadian Retail Sales numbers m/m for June posted in line with expectations 0.2% and excluding autos printed 1.4% vs. expectations of 0.6%. Gold continues to move higher reaching and yet stalling at the 1200 dollars an ounce. West Texas Intermediate is also 2.0% higher trading at 67.15 at 8:00 am EST. BoC Governor Stephan Poloz will speak at the Jackson Hole Symposium at 12:25 pm on Saturday.

 

 

 

  Euro

EUR / USD Expected Range: 1.1553-1.1622

The Euro continued its positive gains into the start of Wednesday, posting about a 1% gain to 1.1573 to start the day. Again, the catalyst was off-shore forces, however, with little to drive the Euro domestically. It was, of course, the Greenback that drove the momentum shift, as it found itself losing ground across the board on the back of comments from President Trump.

The Euro has quickly moved away from the levels last week when we saw 13-month lows, and now EUR/USD is testing 1.16 once again. This move has been driven by the reduced risk and concern around the situation in Turkey as well as the small progress between the US and China with regards to trade negotiations. It should be noted though that both of these risks remain prevalent and therefore so does the risk to the Euro.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2868-1.2936

Is Brexit Secretary Dominic Raab showing up his predecessor David Davis already? Well, judging by the reaction from sterling yesterday this may very well be true. Sterling has long hung on the progress of Brexit talks, and the same could be said with yesterday’s performance as the pound headed northwards

The pound was yesterday’s best-performing currency. While nothing concrete was announced, the tone was generally positive with a commitment from both sides to continue talks and negotiations ongoing without interruption. The most interesting comments perhaps came from Raab when he said that “Our challenge for the coming weeks is to try and define an ambitious partnership between the UK and the EU – a partnership that has no precedent.” This is the case, and there indeed is no expected precedent in the Brexit outcome a factor that has caused the markets to continually be on edge and create the volatility that we have seen in the pound ever since 2016, and until March next year, this is set to continue.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7334-0.7369

The Australian Dollar when valued against the world’s reserve opens stronger this morning; the gains were first led on Tuesday after the release of the RBA monthly Minutes where Governor Philip Lowe raised confidence amongst investors. He reiterated that the RBA would eventually raise interest rates if they were to see progress made on unemployment and inflation adding that any move will “likely be up not down.” The AUD/USD continued its bullish trend intraday and during the North American session touched a high of 0.7381 as the greenback continued to extend its move lower following remarks from U.S. President Trump that the Fed’s path of monetary policy tightening is hindering fiscal stimulus efforts to boost the economy.

Supporting the aussie has also been optimistic comments from Chinese officials despite US President Donald Trump’s view that it was unlikely for them to reach an agreement in Washington later this week. Chinese foreign ministry stated that they wanted to settle the trade dispute with the US via negotiations and added that they were hopeful that both sides could reach a good outcome.

Looking ahead we have Q2 Construction Work Done and the MI Leading Index, meanwhile in Brisbane Deputy Governor Debelle is giving a speech in Brisbane titled “Low inflation” at the Economic Society of Australia Business Luncheon. From a technical perspective, if we stay above 0.7364 resistance the next level in sight is 0.74c. Support is sitting at 0.7345 and 0.7294.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6682-06720

The New Zealand Dollar was supported by further weakness from the US Dollar overnight as the kiwi touched the US 67 cents briefly for the first time in two weeks; as both the DXY and US yields were lower overnight. The NZD/USD cross looks to have bottomed out in such period of 0.6550 and becomes a critical longer-term support level.

The NZD climbed steadily throughout the overnight seeing local session highs of 0.6670 with a small pullback following the latest GlobalDairyTrade auction whereby the price index fell 3.6% on its last sale. With the prior reading flat, dairy prices are now 10% lower since May.

The Kiwi dropped to 0.6650 following the auction before continuing its march higher in the North American session to eventually settle just below resistance at the US 67 cent mark ahead of this morning’s Retail Sales reading which is expected to show a small gain of 0.4% for the 2nd quarter of 2018.

 

 

 

Posted by OFX

Aussie higher on improved risk sentiment

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar has managed to hold above 73c vs the U.S Dollar amid an interview between President Trump and Reuters. In an exclusive, he said that he has “no time frame” for ending the trade dispute with China and also expressed his disappointment with the recent Federal Reserve hikes saying he wasn’t “thrilled” with the Fed Chairman Powell. With an improvement in risk appetite, the Greenback along with US bond yields fell aiding the Aussie recovery to touch a high of 0.7344.

Looking ahead, RBA minutes and a speech by Governor Philip Lowe are the main risk events this morning. There is unlikely to be any change in their message where the RBA expects a slow shift towards full-time employment and a rise in inflation. Any moves by the RBA will likely be a rise but not for some time still.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0980 – 1.1080

It was a quiet day on the currency front as the New Zealand Dollar traded in a tight range after opening the local session at 0.6640 against the US Dollar. The Kiwi drifted to eventual intraday lows of 0.6612 after failing to capitalise any momentum from Fridays gains.

The Kiwi received a boost overnight as equity markets saw a slight move higher as calm has been restored in the short term for Turkey, emerging markets and trade talks between United States and China.

Furthermore, President Donald Trump overnight stated that he disagrees with the Federal Reserve’s decision to raise interest rates and said he should be given some more help by the Fed. The remarks caused a sell off for the Greenback overnight and the Kiwi rallied through to the morning open after an overnight high of 0.6650 before meeting resistance.

Only the lower tiered visitor arrivals & credit card spending data is scheduled for released today before we look forward to this evenings latest Global Dairy Trade Auction reading.

The New Zealand Dollar opens this morning at 0.6645.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7380 – 1.7580

The Great British pound crept upward through trade on Monday pushing back through 1.2750 and testing resistance at 1.28. In the absence of any major data sets or Brexit news Sterling found upside momentum following comments from US President Donald Trump wherein he criticised the FOMC and Federal Reserve for raising interest rates.

The President openly opined Fed President Jerome Powell’s path to tighter monetary policy suggesting “I’m not thrilled with his raising of interest rates”. It is the 2nd time through the last two months Trump has openly criticized the Fed adding to short term downward pressure on the USD. While Sterling took advantage of the dollar’s downturn upside support remains stretched with the UK openly vulnerable to broader Brexit weakness. The GBP has suffered consecutively weekly depreciations through the last six weeks and touched 14 month lows last Wednesday. Marking a 12% depreciation through the 4 months since April.

While the GBP has found some support through the last 3 sessions value remains hamstrung by broader Brexit expectations and we anticipate increasing volatility through the next 6 weeks leading into the next round of EU negotiations.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7205 – 0.7380

The Greenback started the day with a positive tone posting modest advances against its major rivals. However, the US Dollar lost some of that early momentum on the back of comments from both US President Donald Trump and Federal Reserve member Raphael Bostic on current US monetary policies. The President reiterated that he disagrees with Federal Reserve’s decision to raise interest rates so quickly, and that it may backfire. Trump told Reuters that he was “not thrilled” by Chairman Jerome Powell’s decision to raise interest rates and would continue to criticise the Federal Reserve if interest rate hikes continued.

On the data front there were no relevant macroeconomic news yesterday from the US. The calendar will remain light also Tuesday, with focus then on US-China trade talks.

From a technical perspective, the EUR/USD pair rallied to a high of 1.1491, its highest in over a week. The USD/JPY pair traded as low as 110.00 on the back easing Treasury yields and comments made by Donald Trump on monetary policy. The Aussie Dollar surged to its highest level yesterday since August 10, reaching a 24-hour high of 0.7344. All eyes today will be on the Reserve Bank of Australia minutes of its August meeting.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6350 – 0.6420

The Euro extended its early week gains, opening this morning at 1.1490 despite fresh concerns from Italy. The catalyst for the shift upwards was attributable mostly to USD weakness after US President Trump and FOMC Member Bostic both commented on the economy. Nevertheless, the Euro finds itself at its highest point in over a week.

The Euro traded within a tight 30-pip range for much of Monday with little to drive momentum on the economic calendar. However, the market did start to heat up after the Italians took the spotlight. After the tragic Genova bridge collapse the Italian government wants to spend €80 billion on infrastructure. The move however would breach EU budgetary rules, potentially outlining a conflict with the wider union. The Euro shed some of its earlier gains and was whittled lower against the Greenback as investors took the news from Italy poorly.

Fortunes shifted decidedly however after President Trump and the FOMC’s Bostic commented on the economy. President Trump began the proceedings, complaining again about the Fed’s monetary policy decisions. The highlight was his remarks that he expected Powell to be “a cheap-money Fed Chairman” and that he is “…not thrilled with his raising of interest rates”. Bostic however, mentioned that the economy did not need further stimulus but there are concerns over the flattening yield curve. The market interpreted these comments as mostly dovish and the USD fell across the board, driving its counterparts higher, including the Euro.

Moving forward into the week, the domestic economic calendar remains light with the focus squarely placed on on-going US-China trade talks that is slated to start today.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9480 – 0.9630

The Loonie raced to 10-day highs overnight as rising oil prices and US president Trump said he was at odds with the US Fed’s decision to raise interest rates. The broad-based USD weakness saw the USD/CAD fall from highs of 1.3094 to the 10-day low of 1.3045 where we open this morning Sydney time.

Although markets are still wary of the headline risk to the CAD, domestic interest rate expectations continue to firm after markets absorbed Fridays stronger than expected July CPI read. In light of the narrowing yield spreads and price action overnight, new levels USD/CAD levels to watch are 1.3120 on the upside with the 1.3000 handle still a key level of support on the downside.

As discussed yesterday, traders will be looking forward to domestic data sets in the form of June retails sales which are due out Monday for further evidence of strength in the domestic economy. A strong number could push USD/CAD through the key 1.3000 handle leading into BOC governor Poloz speech on Sunday.

 

 

 

Posted by OFX

Trump not pleased with the lack of help from the Fed

OFX Daily Market News

Posted by OFX

  United States Dollar

US economic data is light today with no fundamentals being reported. Tomorrow we will have lots to view and gauge the pulse of Retail Sales at 8:30 am EST as well as the Fed minutes will be released at 2.00 pm.

The market saw outflows from the USD yesterday as hopes over the upcoming US-China trade negotiations gathered pace alongside comments from President Donald Trump. Trump was critical of the Federal Reserve and Jerome Powell in a Reuters interview and said he was hoping to get a little help from the Fed. The comments are not the first time that the President has stepped away from tradition and been critical of the Federal Reserve’s current rate hike path, with two hikes already this year and another on the near horizon.

From a technical perspective, the EUR/USD pair rallied to a high of 1.1491, its highest in over a week. The USD/JPY pair traded as low as 110.00 on the back-easing Treasury yields and comments made by Donald Trump on monetary policy.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2987– 1.3171

The Canadian dollar is trading on broader market sentiment with base metals and energy prices on the rise to start the week. Gold overnight top out at 1196.00 is down 6 dollars at writing but is still up on the day at 1190.87. WTI is up 0.63% to 65.90 dollars per barrel, as market participants would instead take on positions as Iranian sanctions imposed by the US are causing global oil giants to cut lucrative energy projects in Iran.

US President Donald Trump overnight stated that he disagrees with the Federal Reserve’s decision to raise interest rates and said the Fed should give him some more help. The remarks caused a sell-off for the Greenback overnight, and commodity-based currencies rallied.

Canadian Wholesale Trade numbers fell well short of previous and expectations of 0.9% and posted a mere -0.8%. The economic data has been overlooked as the loonie overnight moved through key support of 1.3029 eyeing next support of 1.2987 resistance is seen at 1.3071.

 

 

 

  Euro

EUR / USD Expected Range: 1.1481-1.1542

The Euro has bounced back from last week’s 13-month lows against the USD. Having flirted dangerously with 1.12, the Euro is now thoroughly holding onto 1.15 due to a combination of the USD outflows (see Trump’s comments) and slightly more confidence in Turkey. No significant eurozone data is coming out for the markets until Thursday.

The Euro extended its early week gains, opening this morning at 1.1490 despite fresh concerns from Italy. The catalyst for the shift upwards was attributable mostly to USD weakness after US President Trump and FOMC Member Bostic both commented on the economy. Nevertheless, the Euro finds itself at its highest point in over a week.

The Euro traded within a tight 30-pip range for much of Monday with little to drive momentum on the economic calendar. However, the market did start to heat up after the Italians took the spotlight. After the tragic Genova bridge collapse, the Italian government wants to spend €80 billion on infrastructure. The move, however, would breach EU budgetary rules, potentially outlining a conflict with the broader union. The Euro shed some of its earlier gains and was whittled lower against the Greenback as investors took the news from Italy poorly.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2794-1.2846

The Great British pound crept upward through trade on Monday pushing back through 1.2750 and testing resistance at 1.28. In the absence of any significant data sets or Brexit news, Sterling found upside momentum following comments from US President Donald Trump wherein he criticized the FOMC and Federal Reserve for raising interest rates.

The President openly opined Fed President Jerome Powell’s path to tighter monetary policy suggesting “I’m not thrilled with his raising of interest rates.” It is the 2nd time through the last two months Trump has openly criticized the Fed adding to short-term downward pressure on the USD. While Sterling took advantage of the dollar’s downturn upside support remains stretched with the UK openly vulnerable to broader Brexit weakness. The GBP has suffered consecutively weekly depreciation through the last six weeks and touched 14-month lows last Wednesday. Marking a 12% depreciation through the four months since April.

While the GBP has found some support through the last three sessions value remains hamstrung by broader Brexit expectations, and we anticipate increasing volatility through the next six weeks leading into the next round of EU negotiations.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7333-0.7366

The Australian Dollar has managed to hold above 73c vs. the U.S Dollar amid an interview between President Trump and Reuters. In an exclusive, he said that he has “no time frame” for ending the trade dispute with China and also expressed his disappointment with the recent Federal Reserve hikes saying he wasn’t “thrilled” with the Fed Chairman Powell. With an improvement in risk appetite, the Greenback along with US bond yields fell aiding the Aussie recovery to touch a high of 0.7344.

Looking ahead, RBA minutes and a speech by Governor Philip Lowe are the main risk events this morning. There is unlikely to be any change in their message where the RBA expects a slow shift towards full-time employment and a rise in inflation. Any moves by the RBA will likely be a rise but not for some time still.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6627-0.6675

It was a quiet day on the currency front as the New Zealand Dollar traded in a tight range after opening the local session at 0.6661 against the US Dollar. The Kiwi drifted to eventual intraday lows of 0.6612 after failing to capitalize any momentum from Friday’s gains.

The Kiwi received a boost overnight as equity markets saw a slight move higher as calm has been restored in the short term for Turkey, emerging markets and trade talks between the United States and China.

Only the lower tiered visitor arrivals & credit card spending data is scheduled for release today before we look forward to the latest Global Dairy Trade Auction reading. The New Zealand Dollar opens this morning at 0.6661.

 

 

 

Posted by OFX

FOMC Minutes Released this Week ahead of The Jackson Hole Symposium.

OFX Daily Market News

Posted by OFX

  United States Dollar

The US Dollar fell across the board on Friday as commodity currencies lead upside movers. The greenback closed the day’s worst performer following an uptick in optimism surrounding US-China trade tensions ahead of talks later this week. Rumors US and Chinese delegates are mapping out plans to end trade hostilities helped fuel demand for commodity-led currencies like the CAD, AUD and NZD while fueling the rebound in emerging markets.

Despite the Dollar Index falling six-tenths of a percent through trade on Friday and reversing some of the weeks earlier gains the shift in trade-based sentiment is merely a short-term correction for now. A consolidated solution to recent trade hostilities needs to be found before a significant change in underlying momentum undoes broad-based US strength.

The Federal Reserve won’t be escaping the limelight with the release of the latest FOMC minutes as well as Jerome Powell speaking at the Jackson Hole Symposium (Powell is set to talk about the role of monetary policy in a changing economy). The market will be looking for further signals in the Fed minutes towards two more rate hikes this year; currently, September and December but these are primarily expected. More crucially, therefore, will be further information as to how much more will the balance sheet be shrunk.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3029 – 1.3114

The Loonie was a bit of a mixed bag last week as weakness in commodity prices and risk sentiment more broadly continued to weigh on the commodity-linked currency. Friday’s July inflation read ensured any weakness in the loonie going forward would be short-lived as the Canadian dollar surged 0.8% against the greenback strengthening to touch intraday high of 1.3057. The 3% read represents a 7-year high and came in significantly above market expectations of 2.5% and increases the likelihood the Bank of Canada will raise benchmark interest rates again this year, causing the CAD to appreciate.

This week sees Canadian Retail sales for June released on Wednesday as well as commentary from BoC Governor Poloz speaking on Sunday. Considering the stronger than expected CPI number on Friday, markets will be watching the analysis closely for any indication of timings of future interest rate decisions.

On the technical front, the first support is now at 1.3029, and on the upside, resistances are aligned at 1.3135 and 1.3190 respectively as risk sentiment out of emerging markets and commodity prices expected to continue to drive direction.

 

 

 

  Euro

EUR / USD Expected Range: 1.1394 – 1.1440

The Euro enjoyed a week of mixed fortunes with an out and out resolution to the Turkey issue still in the works. Nevertheless, the euro did manage to post a small weekly gain despite bottoming out at 1.13 during the week. Opening this morning at 1.1428, the Euro looks to have reversed a three-week losing streak although demand for the Euro remains subdued.

The appreciation of the euro looks to have been driven by off-shore forces rather than latent demand for the Euro with the USD falling across the board. The catalyst, in this case, is further trade talks between the US and China which saw risk-sentiment turn positive. Rumors suggest that they are planning a roadmap to put an end to the dispute by November, a decidedly positive outcome according to market pundits. Turkey, however, continues to look problematic for the Europeans although the rhetoric around a contagion effect has been dialed lower. Markets have mostly come to accept that any spill-over effects will be limited in scope.

There were some further encouraging signs for the Euro, however, that did aid in its recovery during the week. Q2 GDP came in better than expected at 0.4% with German GDP, in particular, posting a 0.5% growth. Inflation, however, continues to be a problem with the figure dropping by 0.3% for the union. Overall the releases had minimal effect on the valuation of the euro but painted a picture for investors. Moving forward into the new week, attentions now turn to some minor macroeconomic releases from Germany and developing headlines in the US.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2729 – 1.2776

This upcoming week and last week couldn’t be more contrasting for UK data releases. While last week saw the release of a raft of data in the form of retail sales, inflation and wage growth, this week there is no data whatsoever. Indeed, that is it regarding major UK data reports, with nothing else set to excite the market until September. This is important because last week the data was quite confident from the UK, with retail sales rising (thank you Harry Kane) and unemployment falling to 43-year lows. However, the reaction from the pound was very muted suggesting that all eyes are elsewhere, most notably the risk of a ‘no deal’ Brexit.

Brexit headlines could return this week as UK-EU negotiations start once again while Parliament returns from its summer recess the week after the bank holiday. In the meantime, expect the pound to remain under pressure unless there is a pullback in the USD recovery.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7295 -0.7316

After spending the week below the 73c handle and touching an eighteen-month low of 0.7214 against the U.S Dollar, the aussie staged a recovery during the North American session and managed to close the week at 0.7314. The move was mostly linked to a broad-based USD sell-off and a rebound in base metals. Copper, iron ore and oil all rose as well as seeing a pull-back in the U.S Dollar index; the DXY closed the session at 96.13, 0.48% lower.

On another note, the RBA Governor Philip Lowe spoke before the House of Representatives delivering his half-yearly testimony. It seems both he and the RBA remained upbeat on economic growth prospects and have indicated that the board was unlikely to raise rates for a while but ruled out a rate cut. From a monetary policy perspective, the testimony offers little concerning new information and continues to flag a stable outlook for the RBA for some time. On the exchange rate, Governor Lowe noted that a lower AUD would be “helpful.”

There were no economic data releases locally today; however, the RBA is due to release its monthly minutes. On a technical front, we have support sitting at 0.7270 and 0.7230, with resistance up at 0.7340 and 0.7380.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6610 – 0.6643

The New Zealand Dollar finished off the week higher and gained nearly 1% from its weekly open as commodity currencies rallied on Friday as risk on trades returned. Opening at 0.6580, the Kiwi was in a buoyant mood following the release of an increase in PPI Input & Output for the 2nd quarter of the year. Inputs rose 1% versus the previous quarter reading of 0.6%, mainly due to the increase in crude oil and milk powder.

Intraday moves tested resistance at 66 US cents before pushing through this barrier in the offshore session as a bout of US dollar weakness took hold in the markets. Eventual highs were seen at the close at 0.6630 as trade negotiations re-surfaced between the United States and China, giving some hope to emerging markets.

On the economic docket domestically, this week is the release of Retail Sales and Trade Balance figures as the Kiwi opens higher this morning at 0.6625 against the US Dollar.

 

 

 

Posted by OFX

AUD claws back losses into close as US-China trade tensions subside

OFX Daily Market News

Posted by OFX

  Australian Dollar

After spending the week below the 73c handle and touching an eighteen-month low of 0.7214 against the U.S Dollar, the local unit staged a recovery during the North American session and managed to close the week at 0.7314. The move was mostly linked to a broad-based USD sell-off and a rebound in base metals. Copper, iron ore and oil all rose as well as seeing a pull-back in the U.S Dollar index, the DXY closed the session at 96.13, 0.48% lower.

On another note, the RBA Governor Philip Lowe spoke before the House of Representatives delivering his half-yearly testimony, its seems both he and the RBA remained upbeat on economic growth prospects, and have indicated that the board was unlikely to raise rates for a while, but ruled out a rate cut. From a monetary policy perspective, the testimony offers little in terms of new information, and continues to flag an unchanged outlook for the RBA for some time. On the exchange rate, Governor Lowe noted that a lower AUD will be “helpful”.

Looking ahead, there are no economic data releases locally today, tomorrow however the RBA is due to releases its monthly minutes.

On a technical front we have support sitting at 0.7270 and 0.7230, with resistance up at 0.7340 and 0.7380.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0980 – 1.1080

The New Zealand Dollar finished off the week higher and gained nearly 1% from its weekly open as commodity currencies rallied on Friday as risk on trades returned. Opening at 0.6580, the Kiwi was in a buoyant mood following the release of an increase in PPI Input & Output for the 2nd quarter of the year. Inputs rose 1% versus the previous quarter reading of 0.6%, mainly due to the increase in crude oil and milk powder.

Intraday moves tested resistance at 66 US cents before pushing through this barrier in the offshore session as a bout of US dollar weakness took hold in the markets. Eventual highs were seen at the close at 0.6630 as trade negotiations re-surfaced between the United States and China, giving some hope to emerging markets.

On the economic docket domestically this week is the release of Retail sales and Trade Balance figures as the Kiwi opens higher this morning at 0.6640 against the US Dollar.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7380 – 1.7630

The Great British Pound closed higher Friday, bouncing of mid-week lows at 1.2662 and edging back through 1.27 following a string of largely positive macroeconomic indicators. Thursdays upbeat retail sales print fostered an improvement in broader investor confidence and short-term expectations the British economy is transitioning away from a sluggish start to 2018.

The momentum carried through trade on Friday as the USD dollar fell across the board. However, despite upside gains and a bounce off 14 month lows the correction wasn’t enough to drive Sterling out of a sixth consecutive weekly depreciation. Brexit continues to hang over broader sentiment and remains a risk to medium term GBP valuations, especially as we move ever closer to a no deal Brexit. With little headline macroeconomic data on hand to drive direction into the end of the month attentions again turn to Brexit developments ahead of renewed round of talks next month.

The nearer we move to a Cliff-edged exit scenario the greater the concern across broader markets and with implied volatility increasing over the last fortnight we can expect ongoing uncertainty and downside pressures for the GBP through the coming weeks.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7205 – 0.7380

The US Dollar fell across the board on Friday as commodity currencies lead upside movers. The greenback closed the day’s worst performer following an uptick in optimism surrounding US-China trade tensions ahead of talks later this week. Rumours US and Chinese delegates are mapping out plans to end trade hostilities helped fuel demand for commodity led currencies like the CAD, AUD and NZD while fueling the rebound in emerging markets.

Despite the Dollar Index falling six tenths of a percent through trade on Friday and reversing some of the weeks earlier gains the shift in trade-based sentiment is merely a short term correction for now. A consolidated solution to recent trade hostilities needs to be found before a significant shift in underlying momentum undoes broad based US strength.

Attentions now turn to US China Trade talks on Tuesday and Wednesday while Central bank communication is again in focus as the Fed and FOMC offer the minutes from the August meeting ahead of next months key rate announcement.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6350 – 0.6420

The Euro enjoyed a week of mixed fortunes with an out and out resolution to the Turkey issue still in the works. Nevertheless, the Fibre did manage to post a small weekly gain despite bottoming out at 1.13 during the week. Opening this morning at 1.1438, the Euro looks to have reversed a three-week losing streak although demand for the Euro remains subdued.

The appreciation of the Fiber looks to have been driven by off-shore forces rather than inherent demand for the Euro with the USD falling across the board. The catalyst in this case is further trade talks between the US and China which saw risk-sentiment turn positive. Rumours suggest that they are planning a roadmap to put an end to the dispute by November, a decidedly positive outcome according to market pundits. Turkey, however, continues to look problematic for the Europeans although the rhetoric around a contagion effect has been dialled lower. Markets have mostly come to accept that any spill-over effects will be limited in scope.

There were some further encouraging signs for the Euro however, that did aid in its recovery during the week. Q2 GDP came in better than expected at 0.4% with German GDP in particular posting an 0.5% growth. Inflation however, continues to be a problem with the figure dropping by 0.3% for the union. Overall the releases had minimal effect on the valuation of the Fibre but nevertheless painted a picture for investors.

Moving forward into the new week, attentions now turn to some minor macro-economic releases from Germany and developing headlines in the US.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9430 – 0.9650

The Loonie was a bit of a mixed bag last week as weakness in commodity prices and risk sentiment more broadly continued to weigh on the commodity linked currency. Friday’s July inflation read ensured the softness was short lived as the Canadian Dollar surged 0.8% against the greenback to touch intraday highs of 1.3168. The 3% read represents a 7-year high and came in significantly above market expectations of 2.5% and increases the likelihood the Bank of Canada will raise benchmark interest rates again this year, causing the CAD to appreciate.

This week sees Canadian Retail sales for June released on Wednesday as well as commentary from BoC Governor Poloz speaking on Sunday. In light of the stronger than expected CPI number on Friday, markets will be watching the commentary closely for any indication of timings of future interest rate decisions.

On the technical front, first support can now be seen at 1.3000 and on the upside, resistances are aligned at 1.3135 and 1.3190 respectively as risk sentiment out of emerging markets and commodity prices expected to continue to drive direction.

 

 

 

Posted by OFX

Contagion fears as Lira hits historic low

OFX Daily Market News

Posted by OFX

  United States Dollar

Last week saw the Turkish Lira continue its plunge against the US Dollar, as the Lira remained the major headline for the majority of the week. At one stage, a drop of more than 7% occurred and the USD/TRY breached 7 Lira per dollar for the first time in its history of trading.

European markets were also subdued seeing the Stoxx and Dax both falling 0.5%, contagion gripping the markets as some of the largest banks in Europe look at their exposures to Turkey, and the effects of a potential fallout to emerging markets globally.

On the data front, the Philly Fed Manufacturing Index fell in August to its lowest reading in 21 months, missing expectations of 22 and posting an 11.9. The Director of real-time economics at Moody’s Analytics, Ryan Sweet, advised this was due to rising trade tensions and tightening financial conditions – all of which has been weighing on sentiment. Despite the low reading, indicators remain positive as firms remain optimistic about the future of the local economy. US Housing starts rose 0.9% to a seasonally adjusted rate of 1.1680 million units in July, along with building permits in line with expectations of 1.31M for July. Market expectations could expect a slowdown in the housing industry as interest rates start to rise.

The week closed out with improved market sentiment, as equity markets saw gains across the board and talks of negotiations to calm current trade wars between China and the United States.

 

 

 

  Canadian Dollar

The initial shock of the Turkish collapse notwithstanding, investors focus returned to stronger macroeconomic indicators in Canadian markets last week, with an increased likelihood the Bank of Canada will raise rates again this year.

Elsewhere, NAFTA negotiations continue to plague any upside in the loonie against the greenback and a deal appears nearer following an administration change in Mexico and a broad-based assurance Mexico will seek a Tri-lateral agreement. A primary marker driving short-term direction, medium and longer-term outlooks remain grossly dependent on these negotiations. Comments from US Trade Representative Robert Lighthizer leaned hope to calls in a revitalized NAFTA agreement could be reached. While NAFTA talks continue, the CAD can expect to continue to trade within mostly restricted bounds.

Closing out the week, Friday’s CPI print was well above expectations and posted a 3.0% YoY. This is the highest inflation reading since September 2011. Foreign Security Purchase also released better than the previous of 3.1B, but in line with economist predictions of 11.8B, purchases were 11.55B.

 

 

 

  Euro

Last week began with a continued euro sell-off, as ongoing concerns over EZ bank loans to Turkey rattled investor confidence. EUR/USD has touched its lowest level since June last year, around 1.1316; considering EUR/USD was recently trading around the 1.16 handle, the sharp drop highlights how rapidly events on the EZ’s eastern fringes have developed. EUR/CHF has been affected, as has EUR/JPY.

On the data front last week, the second estimate of Eurozone GDP for the second quarter was revised higher to 0.4% from an initial reading of 0.3%. At the same time the German ZEW Economic Sentiment survey printed -13.7 far better than the -20.1 priced in and streets ahead of last month’s -24.7. Despite this strong pair of numbers the, the reaction was fairly muted as market focus remains stuck on Turkey and the exposure EZ banks have to the beleaguered country. An announcement of tariffs being raised on US imports of cars, alcoholic drinks and leaf tobacco will do little to quell the situation however it appears the euro is the one suffering the most pain as a result.

The end of the week saw the euro sell-off seen on the back of the turmoil in Turkey slow; however, it’s going to be a headwind for some time for the shared currency. As well as concerns re: Turkey, the tragic events seen in Italy this week when a bridge collapsed is also weighing heavily on the minds of many.

 

 

 

  British Pound

GBP/USD began the week under pressure after Fridays fall on the back of the erupting crisis in Turkey that saw investors dump the Lira and shun risk assets. Throughout the Asian session investors again sold off the Lira and sought out the usual safe havens of the yen, swissy and gold.

USD/TRY briefly spiked above 7.0 in the weekls earlier sessions after trading as low as 5.55 during Fridays Asian session; this represents a drop of around 21% in 24 hours of trading, a bigger move than the pound felt in the aftermath of the Brexit vote.

The ongoing row between President Erdogan and President Trump has hit investor confidence in the country that bridges the gap between Europe and Asia with fears over the situation hitting other currencies such as the South African Rand and Mexican Peso as well. Stock markets around the world have also been trading lower again, highlighting the flight to safety.

Away from Turkey, last week also saw some top-tier data releases in the UK. The Average Earnings Index which includes bonus payments saw a 2.4% rise 3m/y when a hold at the previous months 2.5% was expected. The data (which in theory fuels overall inflation) is closely watched by the Bank of England so the shortfall will have been noted by members of the Banks Monetary Policy Committee.

UK CPI rose slightly to 2.5% y/y. The uptick was predicted by the markets and sterling barely moved on the back of the release. The report cited rising prices for computer games and transport fares as adding the main upward pressure to the basket of goods CPI is calculated against. At the same time PPI was released showing goods and raw materials purchased by manufacturers rose 0.5% m/m higher than the 0.1% expected. This pipeline pressure could add some support to inflation in the medium term if it is passed on to consumers.

 

 

 

  Australian Dollar

Last week saw equities market fall to fresh multi-month low amid the unstoppable decline of the Turkish Lira, and with it, the Australian Dollar was dragged to yearly lows against its US counterpart.

Investors demand for haven assets as of late has increased, amid ongoing concerns surrounding the state of the Turkish Lira. The fear is that a collapse will have a run on effect across emerging markets and European Banks exposed to the embattled Turkish economy.

On the data front, China released its Industrial Production and Retail Sales numbers, both for July. Industrial Production came in 0.3% shy of expectations, posting at 6.0% with Retail Sales posting at 8.8% vs an expected 9.2%. Investors keenly keep an eye on Chinese data releases; it can have a broad impact on the markets due to China’s influence on the global economy. While locally we saw the release of the July NAB’s Business Confidence and Business Conditions indexes, seen unchanged at 6 and 15 respectively.

Closing out the week, the Australia dollar found some needed support, following a stronger than expected labour market print and bounce in value of the Chinese Yuan. The AUD jumped off intraday lows at 0.7225 following reports the unemployment rate fell unexpectedly to 5.3%, while year to date job’s growth remained positive as the pace of full time employment growth outstripped part-time work. The AUD jumped to 0.7271 on the back of the largely upbeat read as the print lends itself to a tale of gradual improvement, suggesting the next move in interest rates will be up.

 

 

 

  New Zealand Dollar

The New Zealand Dollar continues to consolidate in the general “risk-off” environment spreading throughout the markets. The Turkish Lira again dominated headlines with their surprising appreciation against a rampant USD. The Lira strengthened by about 5% after Qatar committed to a $15b direct investment package for Turkey.

Regulators in Turkey also highlighted further limits on FX swaps which helped ease concerns for the Lira. Although a positive step forward, the rhetoric stepped up a notch with President Erdogan announcing tariffs on a variety of US goods. Despite the appreciation in the Lira, emerging markets continued their broad sell-off, pointing to other underlying issues with the sector.

Overall, the New Zealand Dollar has been caught in the cross-winds as broad weakness in emerging markets, falling commodity prices, US monetary Policy, Chinese growth and trade wars all begin to take its toll. As a currency that benefits from risk-taking, this environment does not help the Kiwi’s fortunes. The New Zealand Dollar now looks to hold its ground with attention firmly affixed to off-shore events.

NZD/USD closed the week a touch above the 0.6630.

 

 

 

Posted by OFX

Contagion fears as Lira hits historic low

OFX Daily Market News

Posted by OFX

  Australian Dollar

Last week saw equities market fall to fresh multi-month low amid the unstoppable decline of the Turkish Lira, and with it, the Australian Dollar was dragged to yearly lows against its US counterpart.

Investors demand for haven assets as of late has increased, amid ongoing concerns surrounding the state of the Turkish Lira. The fear is that a collapse will have a run on effect across emerging markets and European Banks exposed to the embattled Turkish economy.

On the data front, China released its Industrial Production and Retail Sales numbers, both for July. Industrial Production came in 0.3% shy of expectations, posting at 6.0% with Retail Sales posting at 8.8% vs an expected 9.2%. Investors keenly keep an eye on Chinese data releases; it can have a broad impact on the markets due to China’s influence on the global economy. While locally we saw the release of the July NAB’s Business Confidence and Business Conditions indexes, seen unchanged at 6 and 15 respectively.

Closing out the week, the Australia dollar found some needed support, following a stronger than expected labour market print and bounce in value of the Chinese Yuan. The AUD jumped off intraday lows at 0.7225 following reports the unemployment rate fell unexpectedly to 5.3%, while year to date job’s growth remained positive as the pace of full time employment growth outstripped part-time work. The AUD jumped to 0.7271 on the back of the largely upbeat read as the print lends itself to a tale of gradual improvement, suggesting the next move in interest rates will be up.

 

 

 

  New Zealand Dollar

The New Zealand Dollar continues to consolidate in the general “risk-off” environment spreading throughout the markets. The Turkish Lira again dominated headlines with their surprising appreciation against a rampant USD. The Lira strengthened by about 5% after Qatar committed to a $15b direct investment package for Turkey.

Regulators in Turkey also highlighted further limits on FX swaps which helped ease concerns for the Lira. Although a positive step forward, the rhetoric stepped up a notch with President Erdogan announcing tariffs on a variety of US goods. Despite the appreciation in the Lira, emerging markets continued their broad sell-off, pointing to other underlying issues with the sector.

Overall, the New Zealand Dollar has been caught in the cross-winds as broad weakness in emerging markets, falling commodity prices, US monetary Policy, Chinese growth and trade wars all begin to take its toll. As a currency that benefits from risk-taking, this environment does not help the Kiwi’s fortunes. The New Zealand Dollar now looks to hold its ground with attention firmly affixed to off-shore events.

NZD/USD closed the week a touch above the 0.6630.

 

 

 

  British Pound

GBP/USD began the week under pressure after Fridays fall on the back of the erupting crisis in Turkey that saw investors dump the Lira and shun risk assets. Throughout the Asian session investors again sold off the Lira and sought out the usual safe havens of the yen, swissy and gold.

USD/TRY briefly spiked above 7.0 in the weekls earlier sessions after trading as low as 5.55 during Fridays Asian session; this represents a drop of around 21% in 24 hours of trading, a bigger move than the pound felt in the aftermath of the Brexit vote.

The ongoing row between President Erdogan and President Trump has hit investor confidence in the country that bridges the gap between Europe and Asia with fears over the situation hitting other currencies such as the South African Rand and Mexican Peso as well. Stock markets around the world have also been trading lower again, highlighting the flight to safety.

Away from Turkey, last week also saw some top-tier data releases in the UK. The Average Earnings Index which includes bonus payments saw a 2.4% rise 3m/y when a hold at the previous months 2.5% was expected. The data (which in theory fuels overall inflation) is closely watched by the Bank of England so the shortfall will have been noted by members of the Banks Monetary Policy Committee.

UK CPI rose slightly to 2.5% y/y. The uptick was predicted by the markets and sterling barely moved on the back of the release. The report cited rising prices for computer games and transport fares as adding the main upward pressure to the basket of goods CPI is calculated against. At the same time PPI was released showing goods and raw materials purchased by manufacturers rose 0.5% m/m higher than the 0.1% expected. This pipeline pressure could add some support to inflation in the medium term if it is passed on to consumers.

 

 

 

  United States Dollar

Last week saw the Turkish Lira continue its plunge against the US Dollar, as the Lira remained the major headline for the majority of the week. At one stage, a drop of more than 7% occurred and the USD/TRY breached 7 Lira per dollar for the first time in its history of trading.

European markets were also subdued seeing the Stoxx and Dax both falling 0.5%, contagion gripping the markets as some of the largest banks in Europe look at their exposures to Turkey, and the effects of a potential fallout to emerging markets globally.

On the data front, the Philly Fed Manufacturing Index fell in August to its lowest reading in 21 months, missing expectations of 22 and posting an 11.9. The Director of real-time economics at Moody’s Analytics, Ryan Sweet, advised this was due to rising trade tensions and tightening financial conditions – all of which has been weighing on sentiment. Despite the low reading, indicators remain positive as firms remain optimistic about the future of the local economy. US Housing starts rose 0.9% to a seasonally adjusted rate of 1.1680 million units in July, along with building permits in line with expectations of 1.31M for July. Market expectations could expect a slowdown in the housing industry as interest rates start to rise.

The week closed out with improved market sentiment, as equity markets saw gains across the board and talks of negotiations to calm current trade wars between China and the United States.

 

 

 

  Euro

Last week began with a continued euro sell-off, as ongoing concerns over EZ bank loans to Turkey rattled investor confidence. EUR/USD has touched its lowest level since June last year, around 1.1316; considering EUR/USD was recently trading around the 1.16 handle, the sharp drop highlights how rapidly events on the EZ’s eastern fringes have developed. EUR/CHF has been affected, as has EUR/JPY.

On the data front last week, the second estimate of Eurozone GDP for the second quarter was revised higher to 0.4% from an initial reading of 0.3%. At the same time the German ZEW Economic Sentiment survey printed -13.7 far better than the -20.1 priced in and streets ahead of last month’s -24.7. Despite this strong pair of numbers the, the reaction was fairly muted as market focus remains stuck on Turkey and the exposure EZ banks have to the beleaguered country. An announcement of tariffs being raised on US imports of cars, alcoholic drinks and leaf tobacco will do little to quell the situation however it appears the euro is the one suffering the most pain as a result.

The end of the week saw the euro sell-off seen on the back of the turmoil in Turkey slow; however, it’s going to be a headwind for some time for the shared currency. As well as concerns re: Turkey, the tragic events seen in Italy this week when a bridge collapsed is also weighing heavily on the minds of many.

 

 

 

  Canadian Dollar

The initial shock of the Turkish collapse notwithstanding, investors focus returned to stronger macroeconomic indicators in Canadian markets last week, with an increased likelihood the Bank of Canada will raise rates again this year.

Elsewhere, NAFTA negotiations continue to plague any upside in the loonie against the greenback and a deal appears nearer following an administration change in Mexico and a broad-based assurance Mexico will seek a Tri-lateral agreement. A primary marker driving short-term direction, medium and longer-term outlooks remain grossly dependent on these negotiations. Comments from US Trade Representative Robert Lighthizer leaned hope to calls in a revitalized NAFTA agreement could be reached. While NAFTA talks continue, the CAD can expect to continue to trade within mostly restricted bounds.

Closing out the week, Friday’s CPI print was well above expectations and posted a 3.0% YoY. This is the highest inflation reading since September 2011. Foreign Security Purchase also released better than the previous of 3.1B, but in line with economist predictions of 11.8B, purchases were 11.55B.

 

 

 

Posted by OFX

Greenback To Trade on Broader Market Sentiment as Fundamentals are Light

Posted by OFX

  United States Dollar

The US Dollar index stalled overnight after reaching a peak, post the retail sales figures in the United States on Wednesday at 96.98. The DXY was down 0.12% overnight, after touching an intraday low of 96.32 though remains strong following a 5% gain in 2018.

President Donald Trump changed his tune yesterday after recently talking down the value of the local currency. Tweeting that “Money is pouring into our cherished DOLLAR like rarely before.” Market sentiment improved yesterday as equity markets saw gains across the board with the Dow rallying 1.6% as talks of negotiations to calm current trade wars between China and the United States.

The Philly Fed Manufacturing Index fell in August to its lowest reading in 21 months as director of real-time economics at Moody’s Analytics advised was due to rising trade tensions and tightening financial conditions weighing on sentiment. Despite the low reading, indicators remain positive as firms remain optimistic about the future of the local economy. U.S. Housing starts rose 0.9% to a seasonally adjusted rate of 1.1680 million units in July, along with building permits in line with expectations of 1.31M for July. Market expectations could expect a slowdown in the housing industry as interest rates start to rise. The calendar is light on today with the release of Prelim University of Michigan Consumer Sentiment & Inflation expectations this evening.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3031 – 1.3114

The Canadian dollar failed to recoup losses suffered through trade on Wednesday edging marginally lower still against the US dollar on Thursday. Having fallen below 0.76 US cents on the back of a decline in oil prices the loonie was treading water ahead of today’s CPI inflation print. Early indicators suggest a stable print that will afford the Bank of Canada the opportunity to maintain the current interest rate setting through September and into the end of the year. However last week’s strong labor market print leaves the door open to a possible upside surprise which could drive short-term support and an extension back through 0.7650 toward the top end of recent ranges.

Today’s CPI print was well above expectations and posted a 3.0% YoY it is the highest inflation reading since September 2011. Foreign Security Purchase also released better than the previous of 3.1B, but in line with economist predictions of 11.8B, purchases were 11.55B.

A primary marker driving short-term direction, medium and longer-term outlooks remain grossly dependent on the NAFTA negotiations. Comments from US Trade Representative Robert Lighthizer leaned hope to calls in a revitalized NAFTA agreement could be reached. While NAFTA talks continue, the CAD can expect to continue to trade within mostly restricted bounds.

 

 

 

  Euro

EUR / USD Expected Range: 1.1366 – 1.1420

Risk sentiment appeared to improve overnight with EUR rising from 1.1360 to 1.1409 before retreating late in yesterday’s North American session to open this morning at 1.1404 against the greenback.

A big day for the Euro today, as we had eurozone inflation data with markets expecting the core CPI YoY July at 1.1%, which printed at the consensus. In light of the European central banks’ cautious monetary policy stance, the soft reading is likely to weigh heavily on the Euro.

Heading into the weekend first resistance can be seen at the daily high of 1.1410 before 1.1550 with downside supports seen at 1.335 and 1.3000 respectively.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2697 – 1.2749

The Pound Sterling has managed to regain a little ground against the greenback after UK Retail Sales caught the market off guard with a strong July increase. The GBP/USD moved from lows of 1.2690 to touch an eventual high of 1.2753 as the figures released showed an uptick of 0.4%, up from -0.5% in June, the data was well above expectations of a 0.2% increase. The annual pace of sales growth has risen from 2.9% to 3.5% in volume terms.

There was no local data out today. Therefore, markets will be attuned to ongoing Brexit uncertainty/fear of a ‘no deal’/hard Brexit. Also, reports that the US and China will be holding talks at the end of the month have revived hopes of an end to a global trade war which could boost the Pound.

On the technical side, support is seen at 1.2700 followed by 1.2589 (June 21st, 2017 Low) and on the upside resistance seen at 1.2789 and 1.2838.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7252 -0.7279

The Australia dollar found support through trade on Thursday following a stronger than expected labor market print and bounce in the value of the Chinese Yuan. The AUD jumped off intraday lows at 0.7225 following reports the unemployment rate fell unexpectedly to 5.3%, while year to date job’s growth remained confident as the pace of full-time employment growth outstripped part-time work. The AUD jumped to 0.7271 on the back of the most upbeat read as the print lends itself to a tale of gradual improvement, suggesting the next move in interest rates will be up.

The AUD consolidated gains as the Chinese Yuan recovered from near 20-month lows on news China and the US will engage in a new round of trade negotiations before the end of the month. While there is a considerable degree of skepticism, the new talks will yield an ongoing trade agreement the notice of intent to discuss the recent tit for tat tariff conflict has temporarily doused the flare-up in risk aversion and leaned short-term support to the Yuan and AUD as a proxy.

Having touched 0.7289, the AUD opens this morning buying 0.7277 U.S cents as attentions turn to the commentary from RBA governor Lowe as the primary macroeconomic marker governing direction into the weekend ahead of RBA and FOMC minutes next week and the US-China trade talks on Tuesday and Wednesday for a broader long-term course.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6612 – 0.6679

The New Zealand Dollar finds itself slightly higher over the last 24 hours, touching 0.6584 this morning. Moving within striking distance of 0.66, the Kiwi consolidated for much of the day as the headlines were a little less cynical in general. In particular, news of a China-US trade dialogue improved risk-sentiment and supported the Kiwi.

The Bird enjoyed a quiet day on the domestic economic calendar with direction again being driven off-shore. In Australia, employment figures were slightly above expectations which say the Aussie appreciate against its counterparts. Against the NZD, the Aussie is now hitting 1.1025. It was, however, the United States that provided the momentum for markets with news that China and the US will resume trade talks. The NZD enjoyed a muted response although did appreciate slightly against the Greenback.

Closing out the week for the Kiwi is a bit more activity on the domestic calendar with PPI Input and Output slated for release this morning. Across the ditch, the Aussie enjoys a speech from the RBA governor, and as always, attentions remain affixed to on-going trade negotiations around the world.

 

 

 

Posted by OFX

Canadian CPI Printed Its Highest Reading In Seven Years

OFX Daily Market News

Posted by OFX

  Canadian Dollar

The Canadian dollar failed to recoup losses suffered through trade on Wednesday edging marginally lower still against the US dollar on Thursday. Having fallen below 0.76 US cents on the back of a decline in oil prices the loonie was treading water ahead of today’s CPI inflation print. Early indicators suggest a stable print that will afford the Bank of Canada the opportunity to maintain the current interest rate setting through September and into the end of the year. However last week’s strong labour market print leaves the door open to a possible upside surprise which could drive short-term support and an extension back through 0.7650 toward the top end of recent ranges.

Today’s CPI print was well above expectations and posted a 3.0% YoY it is the highest inflation reading since September 2011. Foreign Security Purchase also released better than the previous of 3.1B, but in line with economist predictions of 11.8B, purchases were 11.55B.

A primary marker driving short-term direction, medium and longer-term outlooks remain grossly dependent on the NAFTA negotiations. Comments from US Trade Representative Robert Lighthizer leaned hope to calls in a revitalized NAFTA agreement could be reached. While NAFTA talks continue, the CAD can expect to continue to trade within mostly restricted bounds.

 

 

 

  United States Dollar

USD / CAD Expected Range: 1.3031 – 1.3114

The US Dollar index stalled overnight after reaching a peak, post the retail sales figures in the United States on Wednesday at 96.98. The DXY was down 0.12% overnight, after touching an intraday low of 96.32 though remains strong following a 5% gain in 2018.

President Donald Trump changed his tune yesterday after recently talking down the value of the local currency. Tweeting that “Money is pouring into our cherished DOLLAR like rarely before.” Market sentiment improved yesterday as equity markets saw gains across the board with the Dow rallying 1.6% as talks of negotiations to calm current trade wars between China and the United States.

The Philly Fed Manufacturing Index fell in August to its lowest reading in 21 months as director of real-time economics at Moody’s Analytics advised was due to rising trade tensions and tightening financial conditions weighing on sentiment. Despite the low reading, indicators remain positive as firms remain optimistic about the future of the local economy. U.S. Housing starts rose 0.9% to a seasonally adjusted rate of 1.1680 million units in July, along with building permits in line with expectations of 1.31M for July. Market expectations could expect a slowdown in the housing industry as interest rates start to rise. The calendar is light on today with the release of Prelim University of Michigan Consumer Sentiment & Inflation expectations this evening.

 

 

 

  Euro

CAD / EUR Expected Range: 0.6667 – 0.6717

Risk sentiment appeared to improve overnight with EUR rising from 1.1360 to 1.1409 before retreating late in yesterday’s North American session to open this morning at 1.1404 against the greenback.

A big day for the Euro today, as we had eurozone inflation data with markets expecting the core CPI YoY July at 1.1%, which printed at the consensus. In light of the European central banks’ cautious monetary policy stance, the soft reading is likely to weigh heavily on the Euro.

Heading into the weekend first resistance can be seen at the daily high of 1.1410 before 1.1550 with downside supports seen at 1.335 and 1.3000 respectively.

 

 

 

  British Pound

CAD / GBP Expected Range: 0.5969 – 0.6017

The Pound Sterling has managed to regain a little ground against the greenback after UK Retail Sales caught the market off guard with a strong July increase. The GBP/USD moved from lows of 1.2690 to touch an eventual high of 1.2753 as the figures released showed an uptick of 0.4%, up from -0.5% in June. The data was well above expectations of a 0.2% increase. The annual pace of sales growth has risen from 2.9% to 3.5% in volume terms.

There was no local data out today. Therefore, markets will be attuned to ongoing Brexit uncertainty/fear of a ‘no deal’/hard Brexit. Also, reports that the US and China will be holding talks at the end of the month have revived hopes of an end to a global trade war which could boost the Pound.

On the technical side, support is seen at 1.2700 followed by 1.2589 (June 21st, 2017 Low) and on the upside resistance seen at 1.2789 and 1.2838.

 

 

 

  Australian Dollar

CAD / AUD Expected Range: 1.0446 – 1.0525

The Australia dollar found support through trade on Thursday following a stronger than expected labor market print and bounce in the value of the Chinese Yuan. The AUD jumped off intraday lows at 0.7225 following reports the unemployment rate fell unexpectedly to 5.3%, while year to date job’s growth remained confident as the pace of full-time employment growth outstripped part-time work. The AUD jumped to 0.7271 on the back of the most upbeat read as the print lends itself to a tale of gradual improvement, suggesting the next move in interest rates will be up.

The AUD consolidated gains as the Chinese Yuan recovered from near 20-month lows on news China and the US will engage in a new round of trade negotiations before the end of the month. While there is a considerable degree of skepticism, the new talks will yield an ongoing trade agreement the notice of intent to discuss the recent tit for tat tariff conflict has temporarily doused the flare-up in risk aversion and leaned short-term support to the Yuan and AUD as a proxy.

Having touched 0.7289, the AUD opens this morning buying 0.7277 U.S cents as attentions turn to the commentary from RBA governor Lowe as the primary macroeconomic marker governing direction into the weekend ahead of RBA and FOMC minutes next week and the US-China trade talks on Tuesday and Wednesday for a broader long-term course.

 

 

 

  New Zealand Dollar

CAD / NZD Expected Range: 1.1495 – 1.1571

The New Zealand Dollar finds itself slightly higher over the last 24 hours, touching 0.6584 this morning. Moving within striking distance of 0.66, the Kiwi consolidated for much of the day as the headlines were a little less cynical in general. In particular, news of a China-US trade dialogue improved risk-sentiment and supported the Kiwi.

The Bird enjoyed a quiet day on the domestic economic calendar with direction again being driven off-shore. In Australia, employment figures were slightly above expectations which say the Aussie appreciate against its counterparts. Against the NZD, the Aussie is now hitting 1.1025. It was, however, the United States that provided the momentum for markets with news that China and the US will resume trade talks. The NZD enjoyed a muted response although did appreciate slightly against the Greenback.

Closing out the week for the Kiwi is a bit more activity on the domestic calendar with PPI Input and Output slated for release this morning. Across the ditch, the Aussie enjoys a speech from the RBA governor, and as always, attentions remain affixed to on-going trade negotiations around the world.

 

 

 

Posted by OFX

AUD bounces on labour market improvements and Yuan recovery

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australia dollar found support through trade on Thursday following a stronger than expected labour market print and bounce in value of the Chinese Yuan. The AUD jumped off intraday lows at 0.7225 following reports the unemployment rate fell unexpectedly to 5.3%, while year to date job’s growth remained positive as the pace of full time employment growth outstripped part time work. The AUD jumped to 0.7271 on the back of the largely upbeat read as the print lends itself to a tale of gradual improvement, suggesting the next move in interest rates will be up.

The AUD consolidated gains as the Chinese Yuan recovered from near 20-month lows on news China and the US will engage in a new round of trade negotiations before the end of the month. While there is a large degree of skepticism the new talks will yield an ongoing trade agreement the notice of intent to discuss the recent tit for tat tariff conflict has temporarily doused the flare up in risk aversion and leant short term support to the Yuan and AUD as a proxy.

Having touched 0.7287 the AUD opens this morning buying 0.7261 U.S cents as attentions turn to commentary for RBA governor Lowe as the primary macroeconomic marker governing direction into the weekend ahead of RBA and FOMC minutes next week and the US-China trade talks on Tuesday and Wednesday for broader long term direction.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0980 – 1.1080

The New Zealand Dollar finds itself slightly higher over the last 24 hours, touching 0.6584 this morning. Moving within striking distance of 0.66, the Kiwi consolidated for much of the day as the headlines were a little less negative in general. In particular, news of a China-US trade dialogue improved risk-sentiment and supported the Kiwi.

The Bird enjoyed a quiet day on the domestic economic calendar with direction again being driven off-shore. In Australia, employment figures were slightly above expectations which say the Aussie appreciate against its counterparts. Against the NZD, the Aussie is now hitting 1.1025. It was however, the United States that provided the momentum for markets with news that China and the US will resume trade talks. The NZD enjoyed a muted response although did appreciate slightly against the Greenback.

Closing out the week for the Kiwi is a bit more activity on the domestic calendar with PPI Input and Output slated for release this morning. Across the ditch, the Aussie enjoys a speech from the RBA governor and as always, attentions remain affixed to on-going trade negotiations around the world.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7380 – 1.7630

The Pound Sterling has managed to regain a little ground against the greenback after UK Retail Sales caught the market off guard with a strong July increase. The GBP/USD moved from lows of 1.2690 to touch an eventual high of 1.2753 as the figures released showed an uptick of 0.4%, up from -0.5% in June, the data was well above expectations of a 0.2% increase. The annual pace of sales growth has risen from 2.9% to 3.5% in volume terms.

Looking ahead, there is no local data out today therefore markets will be attuned to ongoing Brexit uncertainty/fear of a ‘no deal’/hard Brexit. Also, reports that the US and China will be holding talks at the end of the month have revived hopes of an end to global trade war which could boost the Pound.

On the technical side support seen at 1.2700 followed by 1.2589 (June 21st 2017 Low) and on the upside resistance seen at 1.2789 and 1.2838.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7170 – 0.7330

The US Dollar index stalled overnight after reaching a peak post retail sales figures in the United States on Wednesday evening of 96.98. The DXY was down 0.12% for the day, after touching an intraday low of 96.32 though remains strong following a 5% gain in 2018.

President Donald Trump changed his tune overnight after recently talking down the value of the local currency. Tweeting that “Money is pouring into our cherished DOLLAR like rarely before”. Market sentiment improved overnight as equity markets saw gains across the board with the Dow rallying 1.6% as talks of negotiations to calm current trade wars between China and United States.

The Philly Fed Manufacturing Index fell in August to its lowest reading in 21 months as director of real time economics at Moody’s Analytics advised was due to rising trade tensions and tightening financial conditions weighing on sentiment. Despite the low reading, indicators remain positive as firms remain optimistic for the future of the local economy.

United States Housing starts rose 0.9% to a seasonally adjusted rate of 1.1680 million units in July, along with building permits in line of expectations of 1.31M for the month of July. Market expectations could expect a slowdown in the housing industry as interest rates start to rise.

News is light on today with the release of Prelim University of Michigan Consumer Sentiment & Inflation expectations this evening.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6320 – 0.6420

Risk sentiment appeared to improve overnight with EUR rising from 1.1360 to 1.1409 before retreating late in the US session to open this morning at 1.1365 against the greenback. AUD/EUR and NZD/EUR both open higher this morning at 0.6387 and 0.5795 respectively with both currencies being supported by the improvements in risk sentiment and an uptick in the Chinese Yuan.

A big day for the Euro today as we get eurozone inflation data with markets expecting the core CPI to decline 0.5%, maintaining an annual rate of 1.1%. In light of the European central banks cautious monetary policy stance, a disappointing read is likely to weight heavily on the Euro.

Heading into the read first resistance can be seen at the daily high of 1.1410 before 1.1550 with downside supports seen at 1.335 and 1.3000 respectively.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9430 – 0.9680

The Canadian dollar failed to recoup losses suffered through trade on Wednesday edging marginally lower still against the US dollar on Thursday. Having fallen below 0.76 US cents on the back of a decline in oil prices the Loonie simply tread water ahead of today’s CPI inflation print. Early indicators suggest a stable print that will afford the Bank of Canada the opportunity to maintain the current interest rate setting through September and into the end of the year. However last weeks strong labour market print leaves the door open to a possible upside surprise which could drive short term support and an extension back through 0.7650 toward the top end of recent ranges.

While Today’s CPI print looms large as the primary marker driving short term direction, medium and longer-term outlooks remain grossly dependent on NAFTA negotiations. Comments from US trade Representative Robert Lighthizer leant hope to calls a revitalised NAFTA agreement could be reached. While NAFTA talks continue the CAD can expect to continue to trade within largely restricted bounds.

 

 

 

Posted by OFX