U.S. CPI print, FOMC, ECB

OFX Daily Market News

Posted by OFX

  United States Dollar

Due to the lack of clarity when Federal Reserve Chairman Jerome Powell said that the central bank would continue to unwind its balance sheet. While Powell reiterated the views of other policymakers that the Fed would be patient about interest rate hikes, he said the bank’s balance sheet would be “substantially smaller” and raised concerns about the size of U.S. debt.

Also the US-China trade talks appear to be heading towards a constructive, risk-positive result. For instance, the USD/CNH (US dollar – Chinese Yuan) is at its lowest level (strong Yuan) since August as China has pursued additional monetary and fiscal stimulus. China proxy trades (like EUR/USD) continue going higher (strong Euro), and this is also negatively affecting the US dollar.

 

 

 

  Canadian Dollar

The BoC mentioned that the rate normalization would happen “over time,” and also that the Canadian economy has been performing well overall, growth has been running close to potential, and unemployment is at a 40-year low. The BoC also pointed out that looking ahead, exports and non-energy investment are projected to grow solidly, supported by foreign demand, the CUSMA, the lower Canadian dollar, and federal tax measures targeted at investment.

However, the BoC did allege risks from oil and housing. They stated that housing investment has been weaker than expected, as housing markets adjust to municipal and provincial measures, changes to mortgage guidelines, and higher interest rates. Furthermore, household spending will be dampened further by the slow growth in the oil-producing provinces. Regarding the oil concern, it seemed misplaced with oil WTI now in a bull market. The next interest rate decisions are on March 6th and April 24th.

 

 

 

  Euro

The European Central Bank stated that risks for the Eurozone are tilted to the downside in Thursday’s publication of the minutes of its latest policy meeting with concerns growing over the state of the global economy. German and French data of late has missed target with the EZ’s largest economy, Germany looking like it could possibly slip into recession when fourth quarter data is released early next month. On the back the deteriorating outlook money markets have pushed back estimates of when the ECB will hike rates to 2020 from late 2019.

 

 

 

  British Pound

The PM hosted Japanese Prime Minister, Shinzo Abe at Downing St as the two discussed a post-Brexit relationship between the two countries. Abe was the latest high profile name to warn against the UK leaving the EU without an agreement saying the “whole world” wanted the UK to avoid a no deal scenario. Political commentators expect May’s plan to get voted down by a huge margin on Tuesday however it is what happens after that which will be concern to fx traders. Many expect Labour leader Jeremy Corbyn to try and initiate a general election which would likely delay us leaving the EU.

 

 

 

  Australian Dollar

A marginal narrowing of the trade surplus in December did little to sway AUD valuations intraday and broader focus remains affixed to US/China trade talks. Optimism surrounding the latest discussions has improved as key US officials suggest an agreement on trade that both sides “could live with” may be reached.

All eyes were on the release of the FOMC as it released a much more dovish rhetoric acknowledging the path of interest rate rises is less clear now. Comments were in line with FOMC chairman Jerome Powell’s speech in Atlanta the previous week that the Fed were closer to neutral than the market was expecting.

 

 

 

  New Zealand Dollar

The value of the New Zealand dollar went slightly weaker against the Greenback despite news that US-China trade negotiations were progressing well.

The big news was the Federal Reserves’ Chairman Powell speech at the Economic Club of Washington DC which received a mixed response. The news was decidedly more hawkish than the meetings minutes on Wednesday with Powell reiterating the Fed’s data driven stance and confidence in the economy. The positive read did lead to a resurgence in the USD in some geographies but mostly failed to sway markets overall.

 

 

 

Posted by OFX

Aussie Dollar steady ahead of key U.S. CPI print

OFX Daily Market News

Posted by OFX

  Australian Dollar

Thursdays session saw the Australian Dollar maintain its current trend, moving 0.2% higher in its march towards 0.72, a level not seen since December 19th. The Aussie was initially sold off during domestic play as a weaker than expected Chinese CPI print of 1.9% on an annualised basis saw an intraday low of 0.7145.

Federal Reserve Chairman Jerome Powell maintained his flexible rate outlook overnight at a speech in Washington citing a concern in the Chinese economy along with muted inflation. With Powell’s cautious outlook to start 2019, commodity linked currencies continue to receive a boost as investors unwind their greenback positions.

With no Macroeconomic data due for release today from the domestic economy, the Australian dollar will be driven by the latest release of Inflation figures due out this evening from the United States. The AUD/USD looks to continue its recovery and test 0.7200 over the coming days with current support levels at 0.7155.

The Australian Dollar Opens this morning at 0.7185.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0550 – 1.0720

The New Zealand Dollar remains relatively unchanged from yesterdays reading, opening at 0.6780 despite an attempted rebound from the Greenback.

The big news overnight was the Federal Reserves’ Chairman Powell speech at the Economic Club of Washington DC which received a mixed response. The news was decidedly more hawkish than the meetings minutes on Wednesday with Powell reiterating the Fed’s data driven stance and confidence in the economy. The positive read did lead to a resurgence in the USD in some geographies but mostly failed to sway markets overall. Within this context, the NZD initially fell to a low of 0.6771 before regaining the momentum and touching 0.68. The Kiwi however, failed to move beyond the mark again.

Moving into Friday, the Kiwi again enjoys a relatively uneventful day on the economic calendar. Direction will again be determined from the US with their inflation report due for release on Saturday.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7620 – 1.7990

The pound fell towards the back end of the north American session as the cable lacked domestic drivers with the focus for the pair still firmly rooted in the US federal reserve, USD weakness and political risks stemming from the impending Brexit vote. GBP/USD traded within a range of 1.2726 and 1.2801 before falling from 1.2780 to levels nearer to 1.2750. EUR/GBP fell on the day as an air of caution enveloped the European market after both Germany and France have displayed weaker than expected Q4 growth and PMI numbers. The ominous signs for 2019 growth in the eurozone have pushed the EUR lower, with EUR/GBP falling from 0.9060 to 0.9011.

On the Brexit front, Prime Minister Theresa May has been speaking to union leaders and Labour MP’s in a desperate attempt to get her Brexit deal through the UK parliament, even though a large portion of her own ministers oppose it.

We still see initial intraday support for GBP/USD around the 1.2720 handle, with any topside moves expect to face selling pressure approaching the key psychological 1.2800 level.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7080 – 0.7220

The US dollar rebounded through trade on Thursday bouncing off three-month lows following commentary from Fed Chair Jerome Powell. The US Central Bank head confirmed policy makers intended to shrink the banks balance sheet throughout 2019, indicating the FOMC is not done tightening monetary policy. Powell’s upbeat assessment of near term economic performance and his commitment to flexible and adaptive monetary policy helped the USD advance against most major currency counterparts allowing the dollar index to push back through 95.5.

Despite the hawkish undertone investors remain bearish when assessing likely Fed rate hikes with much of the market pricing out a 2019 rate amendment, frontrunning signs the US economy is turning and may be ahead for recession should global growth constraints and ongoing trade hostilities continue.

Attentions today turn to US CPI data as the headline item on the day macroeconomic ticket. A soft helps fuel market expectations the Fed will delay rate hikes and could compound the recent dollar weakness.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6180 – 0.6320

The EUR tumbled against the USD amidst news of a much weaker than expected figure in French industrial production. This was the weakest figure in 4 years and comes off the back of poor German industrial production figures released earlier this week.

The release of the ECB minutes yesterday revealed that the European officials are much more concerned with the deteriorating situation in the Eurozone than they let on. Another important takeaway is the confirmation that a new Target Long Refinance Operation (TLTRO) is under consideration, and that they suggested to revisit the contribution of it to monetary policy going ahead. The TLTRO is a refinancing operation where the ECB can lend long-term loans to banks, and offer them an incentive to increase their lending to businesses and consumers in the Euro area. This will help return inflation rates to level below, but close to 2% over the medium term.

The EUR opened at 1.1498 against the USD this morning.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9380 – 0.9580

Canada enjoyed a quiet day on the economic calendar with movements driven by releases south of the border. The United States had further speeches from the Federal Reserve to digest which ultimately did very little, despite some fluctuations throughout the session. The 6-day appreciation of the CAD against the USD finally came to an end with the Greenback appreciating a paltry 0.1% against its northern neighbour. Initially, things looked rosier for the US Dollar as it rose as high as 1.3250 but it was slowly whittled down to open this morning at 1.3235.

The big news overnight was the speech from FOMC Chairman Jerome Powell who reiterated the data driven nature of rate hikes and his confidence in the economy. His attempt to calm markets after the FOMC minutes on Wednesday was mostly successful with the sell-off of the USD reversing direction in some geographies. The Canadian Dollar however, mostly held its ground.

Moving into the end of the week, the Canadian Dollar looks again to the US for direction in lieu of any data from Canada.

 

 

 

Posted by OFX

Dollar trades sideways amid positive US-China trade talks and Federal Reserve Remarks

OFX Daily Market News

Posted by OFX

  United States Dollar

The US dollar index increased 0.42 percent during yesterday’s session due to the lack of clarity when Federal Reserve Chairman Jerome Powell said that the central bank would continue to unwind its balance sheet. While Powell reiterated the views of other policymakers that the Fed would be patient about interest rate hikes, he said the bank’s balance sheet would be “substantially smaller” and raised concerns about the size of U.S. debt.

In overnight trading, it was a different story; the US-China trade talks appear to be heading towards a constructive, risk-positive result. For instance, the USD/CNH (US dollar – Chinese Yuan) is at its lowest level (strong Yuan) since August as China has pursued additional monetary and fiscal stimulus. China proxy trades (like EUR/USD) continue going higher (strong Euro), and this is also negatively affecting the US dollar. This morning, the US dollar index is falling 0.24 percent.

On the release front, the consumer price index for all urban consumers in the US declined 0.1 percent in December on a seasonally adjusted basis after being unchanged in November. Over the last 12 months, the all items index increased 1.9 percent before seasonal adjustment. Additionally, the index for all items less food and energy rose 0.2 percent in December, the same increase as in October and November.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3110 – 1.3271

The USD/CAD pair increased 0.21 percent in yesterday’s trading session after a strong rally of more than 400 pips over the last 10 days. The price consolidation of the Loonie was influenced by a bounce of the US dollar index, a basket of some major currencies such as the Euro, British Pound, Canadian Dollar, and Aussie dollar.

On the release side, the building permits month to month for November came in at 2.6 percent versus -0.5 percent; however, this positive news about the Canadian economy was not sufficient to prevent the USD/CAD from rising (weaker Loonie).

The USD/CAD touched an intraday high of 1.3259 during yesterday’s trading session. However, it was the price of the Crude Oil WTI that came to the rescue when it hit an intraday high of 52.69 per barrel, notching its longest winning streak in nine years as fears of oversupply amid weaker demand have abated.

 

 

 

  Euro

EUR / USD Expected Range: 1.1465 – 1.1520

The European Central Bank stated that risks for the Eurozone are tilted to the downside in Thursday’s publication of the minutes of its latest policy meeting with concerns growing over the state of the global economy. German and French data of late has missed a target with the EZ’s largest economy; Germany looks like it could slip into recession when fourth-quarter data is released early next month. Additionally, there is a deteriorating outlook on money markets due to pushed back estimates of when the ECB will hike rates to 2020 from late 2019. If this is the case, we will have a new ECB chief at the helm when they do move as the current boss, Mario Draghi’s term as Governor comes to an end in November. The EUR/USD pair moved to an intraday high of 1.1540 given the US dollar weakness; it is trading at 1.1528 at the time of this writing.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2692 – 1.2842

The Brexit debate is set to continue in the House of Commons later today as we approach next Tuesday’s critical vote on Prime Minister Theresa May’s proposed withdrawal agreement. Yesterday the May hosted Japanese Prime Minister Shinzo Abe at Downing Street and the two discussed a post-Brexit relationship between the two countries. Abe was the latest high-profile name to warn against the UK leaving the EU without an agreement. He said that the “whole world” wanted the UK to avoid a no deal scenario. Political commentators expect May’s plan to get voted down by a massive margin on Tuesday; however, it is what happens after that which will be of concern to fx traders. Many expect Labour leader Jeremy Corbyn to try and initiate a general election, which would likely delay the UK leaving the EU. This would cause uncertainty which fx markets hate, but it would raise the prospect of a softer Brexit, which could support the pound.

GBP/USD surges to an intraday high of 1.2850 due to the news that Brexit could be delayed beyond March 29. The cable is trading at 1.2817 at this moment.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7180 – 0.7232

With equity markets relatively calm and progress (of sorts) seemingly being made with US/China talks, the commodity currencies have risen over the past 24 hours. The AUD/USD has pushed up through the 0.7200 handle overnight to sit at 0.7215 currently. Extra upward impetus has been provided by a better than expected retail sales print from down under. Data for November showed a 0.4 percent monthly uptick in spending, which is slightly better than the 0.3 percent forecast. The AUD/USD trades at 0.7217 at the time of this writing.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6800– 0.6840

The NZD/USD pair is back above the 0.6800 handle as the Kiwi ends the week on the up. The next data of note from New Zealand is Monday night’s NZER Business Confidence Survey with holders of the Kiwi hoping for an improvement in last month’s -30, which was its worst reading in nearly ten years. The NZD/USD trades at 0.6829 at this moment.

 

 

 

Posted by OFX

Australian Dollar continues its rebound

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian dollar has fared considerably better on Wednesday after trading in a tight trading pattern throughout Tuesday in the lead up to US FOMC minutes. Opening at 0.7140 the AUD climbed quickly to an intraday high of 0.7171 during domestic play.

All gains were erased following the release of Australian building approvals which saw a seasonally adjusted -9.1% reading and its worst measure in 5 years driven lower in both the apartment and housing sectors.

All eyes were on the release of the FOMC minutes overnight as it released a much more dovish rhetoric acknowledging the path of interest rate rises is less clear now. Comments were in line with FOMC chairman Jerome Powell’s speech in Atlanta the previous week that the Fed were closer to neutral than the market was expecting.

The result was an unwind of greenback positions in the market as investors bought gold and equites as the Australian dollar reached overnight highs of 0.7193 and eventual gains of 0.45% on the day.

The ongoing US-China trade negotiations this week have ended in a positive note as Ted McKinney, US undersecretary for trade and foreign agricultural affairs noted “It’s been a good one for us”. It is expected the outcome will be announced over the coming days. Currently in a 90-day truce, the world is eagerly watching the outcome of the first meetings since December.

With little on the agenda domestically today, attention turns to Chinese inflation data due for release this morning as the Australian dollar opens higher at 0.7170.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0500 – 1.0650

Risk appetite continues to recover, with increased optimism that the US-China trade war will be resolved before the 1 March deadline. The kiwi dollar is stronger this morning when valued against the Greenback nudging above the 0.68 mark in overnight trading and up over 1% for the day.

On the release front there are no scheduled releases today in New Zealand.

From a technical perspective, the NZD/USD pair is currently trading at 0.6793. We continue to expect support to hold on moves approaching 0.6719 while now any upward push will likely meet resistance around 0.6810. The New Zealand dollar overnight fell against the Australian dollar overnight to a low of 1.0549.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7700 – 1.8000

The Pound rose against the greenback on Wednesday but failed to maintain its break through key resistance at 1.2800 as Pound upside was contained by Brexit jitters. GBP/USD touched intraday highs of 1.2803 on the day as a dovish Fed and trade-war correlated risk appetite ensued broad based USD weakness.

On the Brexit front, Prime Minister May suffered another loss on a key Brexit legislation vote. The parliament voted for an amendment which would force the government to announce the next plan in store if the Brexit deal fails to be passed. Thursdays session delivers UK BRC retail sales numbers and BOE Credit conditions surveys which could provide some impetus for the cable. GBP/EUR traders will also be keeping a close eye on the ECB monetary policy meeting on the day.

The key 1.2800 handle now serves as the first line of technical resistance heading into today’s session. Upon breaking through this handle, next lines of resistance are visible at 1.2840 and 1.2896 with any downside moves expected to find bit support approaching 1.2755 followed by 1.2720.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7120 – 0.7220

The Greenback slide continued through trade on Wednesday, making fresh lows not seen since October. Investors continued to relinquish USD holdings as markets adjust expectations for future Federal Reserve rate hikes. The FOMC released the minutes from its December meeting, notes that highlighted a shift toward a more cautious approach. The board acknowledged that while underlying fundamentals remain strong there are adverse signals that suggest the pace of growth is slowing and perhaps tipping toward recession. Having affirmed the Fed’s shift away from a preset rate hike program market focus turns to domestic data developments for guidance.

Having edged nearer a break below 95 the dollar index touched lows at 95.207 as optimism surrounding US/China trade talks helped fuel risk demand further dampening USD claims as markets looked to diversify holdings, a move which benefited commodity led and emerging market currencies. The US dollar could remain under sustained pressure through the short term as optimism surrounding trade developments and expectations for a flatter monetary policy platform through 2019 helping to drive appetite for risk and reduce concerns plaguing emerging markets.

Attentions now turn to US CPI data Friday as the headline item on the macroeconomic ticket. A soft read will only affirm domestic headwinds are building and add further pressure on the FOMC to maintain interest rates into at least the middle of the year.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6160 – 0.6260

The EUR rose against the USD during yesterday’s trading session, breaking through the resistance ceiling of 1.5 to open at 1.1549 this morning. Yesterday’s data releases of the German Trade Balance, Italian Monthly Unemployment Rate and Eurozone Unemployment rate all came out at almost or above the forecasted figures which is helpful for the currency.

Just before midnight, the European Central Bank will release it’s minutes meeting from their December meeting. The ECB sets the monetary policy for the Eurozone, and the minutes will provide in-depth insights into the economic conditions that influenced their decision on where to set interest rates. There are also a few other Eurozone data releases coming out this afternoon in the French Industrial Production and Italian Retail Sales data which are expected to have a minor impact on the EUR.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9450 – 0.9520

The Canadian Dollar continued its advance for the sixth straight day, moving as high as 1.3180 before settling at 1.3215 against its US counterpart. The approximately 0.45% improvement was led by the central banks of both sides of the equation.

Earlier in the day, the Bank of Canada released their monetary policy statement and kept rates on hold at 1.75%. The statement acknowledged the negative impact of low oil prices and the US-China trade wars dampening effect on sentiment. Overall, the statement was cautious in tone.

Further price action did occur later in the day however with the US FOMC releasing their minutes. Tellingly, the statement was dovish with analysts suggesting the Fed is getting closer to the end of the hiking cycle. The result was a wholesale sell off in the Greenback which supported the Canadian dollars gains to close out Wednesday in North America.

Thursday proves to be a quiet day on Canad’s economic calendar with direction to be driven by speeches from members of the US FOMC.

 

 

 

Posted by OFX

The US dollar continues to bleed following additional comments from Fed officials

OFX Daily Market News

Posted by OFX

  United States Dollar

The US dollar index continued to bleed in yesterday’s session (falling around 0.70 percent) after comments from Fed officials Evans, Rosengren, and Bostic, and the FOMC minutes that showed the committee to be in sync with Fed Powell’s message last week related to patience on rate hikes. Fed Bostic’s comment that the next move in rates could be up or down saw the EUR/USD pair finally break the 1.1500 handle. Some money flow reports show that there was aggressive buying of Euros, despite fears of a possible recession ahead for Germany, which is also pushing an already weak US dollar lower.

The United States Trade Representative released a statement that the trade negotiations were focused on China’s pledge to buy more US agriculture, energy, and manufactured goods to cut the US deficit. This does not address the more significant issues like IP theft or domestic subsidies, but it might be enough for now as Trump fights his border battle. On that front, Trump’s address to the nation did little to resolve the issue around border security, while his meeting with Nancy Pelosi and Chuck Schumer ended with Trump walking out abruptly calling it a “waste of time.”

The FOMC Meeting Minutes yesterday showed that volatile markets and muted inflation added to arguments for the Fed to take a gradual approach to lifting interest rates further in 2019. At the same time, market participants are becoming more reluctant to give the Fed’s policy plans the benefit of the doubt, because the Fed might look to implement two further hikes this coming year; however, the market is now pricing in less than a 50% chance of any hike.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3110 – 1.3322

The Bank of Canada maintained its target for the overnight rate at 1.75 percent, as the consensus was expecting. There were no surprises, so the USD/CAD pair did not have more volatility after the fact, The most volatile moment was between one hour before and one hour after the announcement, where the pair traded between 1.3180 and 1.3248. At this moment, it is trading at 1.3215 along with a sideways crude WTI price, which moved 0.25 percent lower in a typical price consolidation movement. It is waiting for more news to pick a direction.

The BoC mentioned that the rate normalization would happen “over time,” and also that the Canadian economy has been performing well overall. Growth has been running close to potential, and unemployment is at a 40-year low. The BoC also pointed out that looking ahead, exports and non-energy investment are projected to grow solidly, supported by foreign demand, the CUSMA, the lower Canadian dollar, and federal tax measures targeted at investment.

The BoC did allege risks from oil and housing however. They stated that housing investment has been weaker than expected, as housing markets adjust to municipal and provincial measures, changes to mortgage guidelines, and higher interest rates. Furthermore, household spending will be dampened further by the slow growth in the oil-producing provinces. Regarding the oil concern, it seemed misplaced with oil WTI now in a bull market. The next interest rate decisions are on March 6th and April 24th.

 

 

 

  Euro

EUR / USD Expected Range: 1.1500 – 1.1561

As is almost always the case, US dollar weakness has seen the Euro rally over the past 24 hours, and it seems like the EUR/USD may have finally broken out of its 1.1250 – 1.1500 range seen since mid-October. With many analysts predicting an end to the dollar run you would be forgiven for thinking a gradual push up to 1.20 could be on the cards for the shared currency; however, a slowing in Eurozone inflation and some concerning data emanating from Germany may put the brakes on the euro’s advance. Indeed, after hitting a high of 1.1570 overnight, we are now back down to 1.1525. The next move higher or lower may come from this lunchtimes publication of the European Central Banks minutes from its last policy meeting; the print is due at 12:30pm.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2740 – 1.2804

Theresa May suffered yet another setback yesterday with regards to her Brexit strategy as MPs voted in favor of limiting the amount of time allowed for another plan to be voted on to three days, rather than the three weeks usually allowed under parliamentary rules. It is widely expected that May’s withdrawal agreement will be defeated on Jan 15th, and the development means there is less time for May to get further concessions from the EU if this does materialize. The decision by Speaker of the House, John Bercow, to allow the vote on limiting the time allowed was widely derided by May supporters who accused him of setting a dangerous precedent by allowing backbenchers such influence over government policy. It should also be noted that any plan B, C, or D they may come up with will not have the approval of Brussels. GBP/USD continues to trade in its weekly range between 1.27 and 1.28; it currently sits around 1.2757.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7160 – 0.7250

Yesterday’s risk-on rally has come to an end with global equity markets lower this morning. Markets were hoping for a breakthrough with regards to the China/US trade talks and the US government shutdown, however, no concrete news has come from Beijing. The AUD/USD pair is trading at 0.7186 at the time of this writing, very close to significant technical support. Tonight’s Retail Sales figures from Australia may provide the impetus for another move above the 0.7200 handle, however, the commodity currencies’ movements are generally dictated by global risk sentiment rather than domestic numbers at present.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6767– 0.6829

The Kiwi has mirrored the Aussie Dollar’s move lower over the past day, with a halt to its advance provided by the risk off environment enveloping markets overnight. There is no data from New Zealand for the rest of the week, so external factors will continue to be the primary driver of the local dollar. The NZD/USD pair is trading without changes at 0.6785.

 

 

 

Posted by OFX

AUD Range bound as USD depreciation stalls

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar offered little through trade on Tuesday bouncing amid a tight 30-point range having failed to extend Monday’s upward push and recovery following last weeks flash crash. Fluctuating between session lows at 0.7117 and daily highs at 0.7150 the AUD remained largely range bound as investors appeared wary of extending gains in the absence of risk demand. A marginal narrowing of the trade surplus in December did little to sway AUD valuations intraday and broader focus remains affixed to US/China trade talks. Optimism surrounding the latest discussions has improved as key US officials suggest an agreement on trade that both sides “could live with” may be reached.

Having recouped all of the losses suffered in last weeks technical depreciation AUD upside remains controlled by US rate expectations and the ongoing trade narrative. Short term gains will remain hard won and it is unlikely we will see significant AUD upside until a formal resolution to trade tensions is reached, despite increasing Chinese Stimulus to forestall a hard landing.

Attentions now turn to US FOMC meeting minutes for direction through trade on Wednesday ahead of domestic Retail Sales data Thursday.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0480 – 1.0680

The New Zealand dollar is slightly weaker this morning when valued against the Greenback despite news that US-China trade negotiations were progressing well. Despite last week’s rise in global demand for riskier trade-correlated currencies the kiwi has been in a tight trading range.

On the release front today all eyes will be on the monthly ANZ Commodity Price Index. Investors are still hoping for progress on trade talks between the US and China.

From a technical perspective, the NZD/USD pair is currently trading at 0.6720. We continue to expect support to hold on moves approaching 0.6700 while now any upward push will likely meet resistance around 0.6760. The New Zealand dollar overnight rose against the Australian dollar overnight reaching 1.0630.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7780 – 1.8150

Tuesday saw the Pound come under pressure as mounting tensions surrounding the pending Brexit vote continued to weigh on the domestic unit. GBP/USD initially traded above the 1.2800 handle amid speculation of an extension of article 50, news which was later denied by Prime Minister May who is still seeking guarantees from the European Union before submitting her deal to parliament. This saw the pair fall to 1.2710 in European trading.

In further bad news for Theresa may, European ministers have again repeated their position that no more concessions will be granted by the union, with UK MP’s also voting 303-296 In favor of limiting the tax powers of the government in the event of a hard Brexit. Both of which present significant challenges to Prime Minister May.

We head into this morning’s Asian session with the GBP/USD trading around the 1.2710 level. Downside supports are seen at 1.2655 and 1.2620 with any GBP upside expected to come into selling pressure at levels nearer to 1.2745 and 1.2780 respectively.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7020 – 0.7180

The US dollar index rebounded through trade on Tuesday, pushing off the 3 month lows touched on Monday as investors adjust expectations regarding European Monetary Policy Stimulus and positive indications from key US officials that a trade deal with China could be reached bolstered optimism. The Euro fell back through 1.1450 following a fall in German Industrial output. While the depreciation was modest it highlights a broader concern surrounding the pace and timing of ECB policy change and suggests the ECB will be forced into a prolonged weaning period if it is to maintain even moderate growth targets. The prospect of the ECB maintaining its current policy setting through the summer helped fuel demand for the USD as investors extend the timeline of expectation wherein the gap between US and European benchmark interest rates will grow.

Despite advancing three tenths of a percent through Tuesday and pushing back toward 96 the dollar index remains under pressure. Domestic political concerns coupled with a rebalancing of interest rate expectations has forced a correction in the value of the world’s base currency and seen a near 2% decline in the USD since mid- December. Investors have scrambled to adjust valuations amidst expectations the global growth slowdown will begin trickling through to the broader US economy.

Attentions now shift toward the FOMC meeting minutes for clarification and guidance surrounding Fed policy making while ongoing trade war discussion shape a wider appetite for risk.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6180 – 0.6280

Although lower today compared to yesterday’s trading session, the EUR has been holding its own despite weak results in recent Eurozone data. Both the Germain Industrial Production and French Trade Balance data releases yesterday both came lower than their forecasts. While the data did come back weaker than expected, the resilience in the EUR has been mostly due to weakness in the USD as investors have been lowering their expectations over further interest rate increases.

Later this evening, more Eurozone data will be released such as the German Trade Balance, Italian Monthly Unemployment Rate and Eurozone Unemployment rate. All expected to have an impact on the EUR depending on the actual figure release compared to its forecast. Despite the recent torrent of Eurozone data releases, most investor’s expectation is on the European Central Bank’s minutes meeting release tomorrow night to provide the biggest insight in the economic condition of the Eurozone.

The EUR opened against the USD at 1.1438 this morning.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9380 – 0.9580

The Canadian Dollar marginally extended its gains overnight, opening this morning at 1.3274 despite an uneventful trading session. There was some news to digest overnight however with the release of Canada’s Trade Balance figures. The result however failed to surprise the market with the result a near exact hit on analysts’ expectations.

Moving into Wednesday, investors look to position themselves ahead of the first monetary policy statement of the year in Canada with pundits also eyeing a rate hike to 2% from 1.75%. With the imminent news on the horizon, attentions will be fixed on the Bank of Canada to drive direction.

 

 

 

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The US dollar erases some of its losses helped by weak European data

OFX Daily Market News

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  United States Dollar

The US dollar index found a floor and increased 0.29 percent in yesterday’s trading session in another up day for a “risk on” environment (Dow +1.1 percent, SPX +0.97 percent, Nasdaq +1.08 percent) with Trump tweeting that trade talks with China were going “very well.” Additionally, despite the fact that the US and China are far from striking a deal, it came to public knowledge that their differences were narrowing, and talks would continue today.

Most of the US dollar bounce though came from a weakness in German industrial production which printed -4.7 percent year to year for November; the lowest since 2009. The Euro, by being the most critical component of the US dollar index (over 50 percent), pulled the Greenback to the upside.

While the recent sudden reversal of previous market expectations of imminent interest rate increases by the Federal Reserve should mean that upward pressure in the US dollar is minor this year, a surprise Fed hike could still push the Greenback to some positive returns. This morning the US dollar index is falling slightly (0.05 percent) and it is consolidating its losses from the last three weeks.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3085 – 1.3400

The Loonie had another astonishing rally assisted by the crude WTI ‘s bounce of over US$ 50 dollars for a seventh straight day. This makes the Bank of Canada’s job easier later today at 10 am EST. The consensus says that the BoC will remain on hold, but leave the door open to further hikes. The fall of the USD/CAD pair this year has been significant; this pair has fallen 443 pips (or – 3.24 percent) from the highest level on December 31st, or a fall of 441 pips in only one week.

Oil prices were buoyant in the overnight trading session with analysts citing hopes for rebounding Chinese demand. However, the USD/CAD will be affected later mostly from the tone used in the BoC’s statement, the press conference, as well as the Monetary Policy Report. The recent disruptions in the energy sector will be a fundamental issue to be considered by the BoC later as well.

Early today, housing starts were released, the actual number came in at 213 k versus the read of 207 k for December. Housing starts are a leading indicator of economic health. Does this positive number give us a hint of what the BoC’s decision will be later today?

 

 

 

  Euro

EUR / USD Expected Range: 1.1460 – 1.1514

More and more evidence is stacking up to suggest that the Euro Zone stumbled over the line at the end of last year. Eurozone confidence faltered to its lowest levels in 23 months yesterday, and this was followed by the slide in Germany’s industrial output in the morning. For Germany, it would appear that the writing could be on the wall for a technical recession as the automotive sector weakens alongside the headwinds presented by the global trade war. For the ECB (and the Euro), ministers could be feeling that they can’t catch a break. Having finally ended its asset purchase program in December and signaling that it could dip its toes into a tightening phase for monetary policy, things could be set on hold if the headwinds hitting Europe are significant enough.

This morning though the EUR/USD pair is trading at 1.1451, representing an increase of 0.11 percent. For now, the Euro has some headwinds such as ignoring Brexit, the Italy-EU budget farce, France’s yellow vest protests, and the Merkel succession. On the flip side, market technicians from important investment banks are showing that the Euro might have a bounce of over 1.1500 during this year.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2662 – 1.2844

Theresa May suffered a minor setback yesterday evening as the government lost a vote on an amendment to the Finance Bill limiting the scope to raise funds in the case of a ‘no deal’ Brexit, in particular, the ability to change taxes. Materially, this is an ‘inconvenience’ to the government because there are other avenues for the government to raise revenue, but it does signal that Parliament is not prepared to support a no deal Brexit. Twenty Tory MPs voted against the government as well adding to the pressure that a ‘no deal’ will not suffice.

The Pound’s reaction to the news yesterday was muted, but it has been only two days since MPs returned to Parliament and Brexit is already dominating headlines once again.

The GBP/USD is trading at 1.2734, representing an increase of 1.16 percent this morning.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7130 – 0.7209

The volatile Australian property market saw another violent swing overnight as building approvals for November came in at -9.1 percent. This was a miss on expectations and the lowest result since 2013, although the Aussie did manage to hold much of its ground against the USD due to renewed hope of a deal being struck between the US and China. In fact, the Aussie edged to its most robust levels in 4 weeks against the Aussie.

The AUS/USD pair is trading at 0.7168 representing an increase of 0.39 percent.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6719– 0.6812

The New Zealand dollar is bouncing this morning off the back of progress between the US and China over trade talks. The NZD/USD pair is moving 0.88 percent higher this morning on renewed hope and further news out of Beijing or from Donald Trump.

 

 

 

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The Australian dollar maintains bullish momentum

OFX Daily Market News

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  Australian Dollar

The Australian Dollar continued its advances higher overnight, climbing 0.45% to 0.7150 in early trading this morning. Opening the week in positive fashion following a broad sell off on the greenback after dovish remarks from FOMC chairman Jerome Powell, a reversal out of safe haven currencies remained in play as the Aussie continued its bullish momentum. The release of weaker than expected ISM non-manufacturing figures from the United States overnight only cemented gains for the domestic currency, reaching 3-week highs.

As the AUD/USD looks to claw its way higher it remains in a bearish trend to start the year, remaining below both 50 and 200 day moving averages on the daily charts. Both Trade Balance and ANZ Job Advertisements are scheduled for release today and will be the key drivers this morning for investors.

From a technical perspective, the AUD/USD pair is currently trading at 0.7145. We continue to expect support to hold on moves approaching 0.7050 while now any upward push will likely meet resistance at 72 US cents.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0425 – 1.0625

The New Zealand dollar yesterday traded in a tight trading range against the U.S dollar after better-than-expected United States jobs figures on Friday lifted the Kiwi from its last week’s lows. The NZD/USD pair traded yesterday between 0.6766 and 0.6725.

On the data front today there are no scheduled releases. However, there could still be more volatility ahead, particularly if US stock markets continue their recent wild swings.

From a technical perspective, the NZD/USD pair is currently trading at 0.6753. We continue to expect support to hold on moves approaching 0.6720 while now any upward push will likely meet resistance around 0.6770. The New Zealand dollar overnight fell against the Australian dollar 1.0579, but rose against the British pence to 0.5287, and 0.5884 against the euro.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7780 – 1.8150

The pound benefited from broad based USD weakness on Monday with GBP/USD extending gains up to 1.2786 to touch its highest level in over a week. At present investors seem to be casting aside Brexit uncertainty as moves back into riskier assets are being observed following last week’s risk off moves.

This is somewhat surprising given the impending Brexit deal vote in the UK parliament which is scheduled for next week. Prime minister May has already stated that a rejection to her deal would leave the UK in ‘uncharted territory’ however, she is unlikely to receive the approval required from the houses. It is worth noting we could be in for some volatility in the nearer term, as Tuesday sees the parliament begin discussions about the matter in the build up to the vote. Any indication that a deal would be accepted will be viewed favorably in terms of price action for the pound.

Technical levels to consider heading into today’s trading are 1.2695 on the downside and 1.2815 on the topside.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7020 – 0.7180

The US Dollar fell through trade on Monday as investors continue to adjust expectations for future growth amid increasing speculation the US economy is running out of steam. The Greenback has suffered a marked correction over the last month as markets anticipate the pace of Fed rate hikes will slow throughout 2019. Recent commentary from Fed officials suggests future monetary policy adjustments will be largely dependent on evolving economic conditions, a move away from preset interest rate hikes and a clear signal the FOMC is wary of extending rates to quickly and in turn stifling future growth.

The Dollar index was down near half a percent in afternoon trade touching 95.73 and appears poised to break two and a half month lows at 95.68, while the Euro extended moves beyond 1.14 to touch 1.1475 and the JPY threatened to break below 1.08.

Attentions now turn to the ongoing domestic political turmoil and border security dispute while, US and China official meet in Beijing this week, the first meeting since President Trump and Premier XI agreed a 90-day trade war truce. Analysts are optimistic the talks will yield a positive return, bolstering emerging and commodity led markets and perhaps easing the strain on global growth concerns.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6180 – 0.6280

The EUR steadily rose against the USD during yesterday’s trading session and is flirting with a daily high of 1.1479, almost matching it’s current past week high of 1.1485. This rise is bolstered by the positive releases regarding retail sales, as the figure from the release came back at 0.6%, higher than the expected forecast of 0.2%.

The next expected major release for the EUR will come on Thursday just before midnight at 11:30pm. This will be minutes of the December meeting of the European Central Bank. It is a detailed record of the ECB Governing Board’s recent meeting, that may possibly provide some direction as to where the interest rate will be set at.

The EUR opened against the USD this morning at 1.1476.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9380 – 0.9580

The Canadian Dollar advanced further overnight as PMI releases and Oil in North America conspired to support the Loonie. Opening this morning at 1.3296, the Canadian Dollar continues its good form from last week to reach a near 4-week high.

The Canadian Dollars good fortune began in the headlines with equity markets in particular, calmed by news US officials meet their Chinese counterparts this week for further trade negotiation. Risk sentiment turned on the news adding support for the Loonie. In other markets, Oil extended its rally from 18-month lows hit in December with support from OPEC production cuts. Crude Oil prices were up 1.3%, also assisting Canada’s Dollar valuation against its counterparts. The latest news however also forced the Loonie higher with PMI figures in the United States posting a disappointing result. Conversely, Canada’s PMI release was surprisingly positive, further exacerbating the Canadian Dollars momentum.

Moving into Tuesday, the Canadian Dollar is set to enjoy the release of their Trade Balance to guide direction ahead of the Bank Of Canada’s monetary policy statement on Thursday.

 

 

 

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The US dollar bounces as we await more details from the trade talks with China

OFX Daily Market News

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  United States Dollar

The US dollar index is bouncing from oversold levels after another day of positive risk sentiment. US Commerce Secretary Wilbur Ross said on CNBC that there is an excellent chance of a deal. The stakes are higher now because of slowing economies and volatile financial markets on both sides.

On the release side, the December ISM non-manufacturing came in at 57.6, versus 58.5. This was lower than expected, which confirms the new Fed’s policy of “wait and see.” Even Fed Bostic said the list of potential problems includes the partial shutdown of the U.S. government, which has left hundreds of thousands of federal employees without a paycheck. He also said that he prefers only one rate hike this year – he is not a voter this year, but his dovish comments pushed US equities to new highs for the day. Additionally, Trump announced he would address the nation tomorrow night (9 PM EST) on the border crisis, which did take some of the excitement off equities and left a floor in the US dollar.

The US dollar index is bouncing 0.25 percent this morning after US officials held the second day of trade talks with Chinese counterparts in Beijing. Neither side has provided any details about the negotiations. These negotiations aim to hammer out details on some pledges such as: more Chinese purchases of U.S. goods and services; increased American access to China’s markets; better protection of U.S. intellectual property; and, reductions in Beijing’s subsidies to Chinese companies.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3267 – 1.3310

The Loonie had another rally in yesterday’s session, but the rally is starting to look exhausted. The USD/CAD touched intraday lows of 1.3268 twice, representing a 0.68 percent decline. This was due to the weakness of the US dollar index and the recent strength of the price of crude.

On the release side, the Ivey Purchasing Managers Index for December came in at 59.7, while the previous month printed at 57.2. This improved number also helped with the Loonie’s bullish mood. The Ivey Purchasing Managers Index is a leading indicator of economic health and holds perhaps the most current and relevant insight into the company’s view of the economy.

Tomorrow, January 9th, the Bank of Canada is expected to keep its key interest rate at 1.75 percent. Additionally, the monetary policy report will probably show cuts in growth estimates after the decline in oil prices since October 2018, which also provides some headwinds on inflation.

Concerns about US-Canadian trade relations, plus a more dovish sounding US Fed chairman in the last few days, have heightened odds for an “unchanged” rate in the BoC’s first announcement of 2019. However, any surprise will make the Loonie very volatile.

 

 

 

  Euro

EUR / USD Expected Range: 1.1407 – 1.1475

Fears are building over the health of the German economy as the latest Factory Orders month to month fell short of target printing. The German economy has been severely affected over recent months on the back of Trump’s trade offensive with China, and its knock-on effect with the rest of the world. Third quarter growth fell into negative territory with -0.2 percent shown for the July to September period, and Germanys DAX stock exchange has fallen around 20 percent over the past 12 months. Holders of the Euro will be hoping that an agreement can be found between the two superpowers, or we could see the Euro Zone’s largest economy slip into recession for the first time since 2009. Thursday sees the release of the minutes from the European Central Banks last interest rate decision. Discussions over the timing of a rate hike will be the main area of focus. EUR/USD started to fall this morning 0.42 percent after touching yesterday intraday highs of 1.1485; it is currently sitting at 1.1427.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2716 – 1.2781

Tomorrow sees the start date of debate in the House of Commons on UK PM Theresa May’s proposed Brexit withdrawal agreement, ahead of next Tuesday’s parliamentary vote on whether to accept it or not. With MPs returning to work yesterday after the Christmas recess, there has been a flurry of news on the matter, including Arch-Brexiteer, Boris Johnson calling on MPs to vote down May’s plan; the government carrying out tests on what a no deal Brexit could mean for traffic at Dover; and, Brexit Secretary, Stephen Barclay, denying reports that leaving the EU could be postponed; etc. It’s looking likely that May’s plan will get voted down at the first attempt on Tuesday without some further assurances from the EU emerging regarding the Irish backstop. Expect sterling volatility to return over the coming days after a relatively calm Christmas period. The GBP/USD is falling 0.32 percent this morning; it is currently sitting at 1.2731.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7120 – 0.7150

With little news emanating from Beijing over the trade talks between US and Chinese officials, the proxy for the subject matter, the Aussie dollar, is weakening this morning. It has decreased 0.25 percent so far. AUD/USD had been relatively calm yesterday, recovering from last week’s Yen driven flash crash.

Positive news regarding progress on the talks will push the Aussie dollar higher. We should hopefully get some news today with negotiations scheduled to wrap up later this morning. Last night saw Australian trade balance numbers fall short with an AUD$1.93B surplus seen for November. Tonight, we have Building Approvals month to month with another contraction in the sector eyed. AUD/USD is trading at 0.7128 this morning.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6687– 0.6750

Like the Aussie, the Kiwi is weakening against the US dollar with markets awaiting news on the China/US trade talks. There is no data of note from New Zealand this week, so external factors will be the primary driver of the Kiwi. NZD/USD is currently at 0.6716, a decrease of 0.57 percent.

 

 

 

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Australian Dollar rallies 1.5% following FOMC chairman remarks

OFX Daily Market News

Posted by OFX

  Australian Dollar

The first week of the year for the Australian Dollar was one of wild volatility as investors looked to re-enter the market following New Year Holidays. Fridays sessions saw the AUD/USD claw back last week’s losses after a flash crash diminished the Aussie to its lowest levels since the Global Financial Crisis.

Opening Friday morning just above phycological support at 70 US cents, the Aussie traded in a tight twenty pip range into the lead up to the release of Non-Farm Payrolls where the majority of price action occurred.

Despite strong employment figures out of the United States which initially pushed the AUD/USD twenty pips lower, it was dovish remarks from Federal Reserve Chairman Jerome Powell which caused a sell off on the greenback as he suggested rates are just below neutral.

The Australian Dollar enjoyed a run following the comments to eventual highs of 0.7125 and gains of 1.5% for the day. This week the local economy will focus on the release of Trade Balance figures tomorrow as we open this morning at 0.7115.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0425 – 1.0625

The New Zealand dollar edged higher through trade on Friday recouping losses suffered during Thursday’s flash crash and extending back through 0.67 to test week long highs at 0.6750. With little data on hand Friday markets simply unwound the technical decline as risk appetite stabilised and fundamental trading reversed algorithm led moves.

Having found support in a softer USD the Kiwi appears posed to push back through 0.6750 for the first time since December 20. The NZD was one of the worst performers among G10 currencies throughout December as risk-off trade and ongoing US/China trade war concerns weighed on the commodity led unit. Despite having bounced off monthly lows the NZ remains vulnerable to further trade tensions and a failure in market pricing of Fed monetary policy. Traders have seemingly underpriced FOMC rate hikes through 2019 when contrast with a dovish RBNZ could leave the NZD open to a downward correction through Q1.

 

 

 

  British Pound

GBP / AUD Expected Range: 0.7020 – 0.7180

The Sterling has started the week buying 1.2721 US cents, 1.1167 Euro and 138.03 Japanese Yen at Mondays Sydney open. Last week’s ‘flash crash’ saw the pound fall across the board during Thursday’s trade, as fears of a global economic slowdown, particularly in China, forced investors into save haven currencies such as JPY and USD. Losses were short-lived however, after falling to its lowest levels since April 2017 on Thursday, Friday’s session saw the domestic unit surge against the greenback, rising 0.6% to touch 1.2722.

The resurgence came despite stronger than expected US jobs growth and comments from Fed Chair Jerome Powell regarding the central bank’s sensitivity to market concerns about a U.S. led economic slowdown. Although we did see a strong result in the service sector survey on Friday which aided the pound, we expect the domestic unit to remain under pressure as the effects of an uncertain Brexit situation are starting to be felt, notably in the housing market.

Looking to the week ahead, the first risk event for the pound comes on Wednesday as we have commentary from Bank of England Governor carney followed by GDP and manufacturing production numbers due out on Friday. The numbers will be closely watched by traders who are eager to gauge the magnitude of the Brexit uncertainty on the economy. We see the GBP/USD as being relatively well supported at 1.2655 and 1.2610 on the downside with upside moves expected to face selling pressure approaching technical resistance levels at 1.2745 before 1.2815.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7020 – 0.7180

Despite a largely robust labour market report the US Dollar edged lower into last weeks close, following commentary from Fed-Chair Jerome Powell and suggestions the FOMC will adopt a cautious approach to Monetary Policy leading into 2019. Powell affirmed the Fed is no longer on a preset path to higher interest rates and “will be patient as we watch to see how the economy evolves”. The shift toward a more data dependent platform has weighed on the USD in recent weeks as mounting concerns the global slowdown and ongoing China trade war will soon trickle down and begin dampening domestic growth prospects within the US.

Having slipped against the EURO and flattening out against the JPY attentions now turn to Fed commentary/minutes, inflation data and the ongoing political turmoil caused by the Government Shutdown. While domestic data has remained strong and core CPI is expected to remain stable, headline CPI is tipped to decline through December as energy prices weigh on top end data points. Ongoing border security disputes and domestic political tensions are likely to hamper significant USD upside through the short term. Attentions now turn to services data Monday as the headline ticket on the day’s macroeconomic docket.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6050 – 0.6280

The EUR rose against the USD to open at 1.14 this open, after recovering from a one week low of 1.1313. This comes off the back of a weaker figure from the Eurostat release of the CPI Flash Estimate which came out at 1.6%, lower than last month’s figure of 1.8%. A sentiment of disappointing European data continues, as soft growth figures and inflation endure from December.

The EU will kick-start the macroeconomic with releases of EU, German and Italian Retail Sales. These releases show the total value of inflation-adjusted sales at the retail level, excluding automobiles and gas stations. The first one being the German data, which comes out later this evening at 6pm.

Another major release for the EUR later this week, is the minutes of the December meeting of the European Central Bank. The ECB sets the monetary policy for the Eurozone, and the minutes will provide insights into the economic conditions that influenced their decision on where to set interest rates.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9380 – 0.9630

The Canadian Dollar appreciated significantly over the weekend as US dollar weakness forced the Cad higher. The Loonie was relatively range bound for much of last Friday, trading within 1.3425 and 1.3455 against its US counterpart but ultimately moved into positive territory after the US Federal Reserves’ Powell, undermined the Greenback. Opening this morning at 1.3375, the Canadian Dollar was also well supported from Oil and Inflation data.

Friday was a busy day for the Canadian Dollar which initially released surprisingly positive employment figures on the same day that the US released theirs. The US threatened to move higher on their release but were more-or-less matched by Canada’s result and higher oil prices. The net effect was an almost identical exchange rate to the rate prior to the announcements. The heavy hitting impact came later in the day however when the Federal Reserve’s Chair Powell offered a noticeably more dovish statement than anticipated. The US Dollar fell across the board which also saw the Loonie bounce higher against the Greenback.

Moving into Monday of a new week, the Canadian Dollar looks to more inflation data for direction.

 

 

 

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