US GDP Q2 Expected at 4% posts a 4.2% Growth Rate

OFX Daily Market News

Posted by OFX

  United States Dollar

The United States Dollar consolidated its position for much of Tuesday as the quiet economic calendar left investors to ponder the recent US-Mexico trade deal. With the US Dollar Index (DXY) opening this morning at 94.72, the general tone of the USD remains consistent with the start of the week.

The US-Mexico Trade deal continues to dominate market sentiment in the absence of any new headlines or data. The positive news saw investors shift gears and support a ‘risk-on’ mood in global markets. While the currency movements have been modest, the market nevertheless, continued favoring USD counterparts as it awaits further news from the US-China trade front.

Market Participant attention no turns to Preliminary GDP Quarter on Quarter numbers and the Crude Oil Inventories for direction, while keeping a close eye on the headlines. US GDP Q2 expected at 4% posts a 4.2% growth rate.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2890 – 1.2987

The Canadian Dollar rallied through trade on Tuesday, buoyed by news the US and Mexico had reached a bilateral trade agreement bolstering hopes the three-way trade pact, NAFTA, can be reformed. The Loonie pushed through 0.7750 after President Trump and Pena Nieto announced a preliminary agreement that solved many of the open issues and opens the door engaging Canada on broader NAFTA discussions.

The Tri-lateral trade agreement has long been a key driver of CAD fortunes and while we are still some way off a reformed accord this week’s progress goes a long way in easing fears talks will break down completely. Loonie direction will remain tied to ongoing trade discussions and with significant challenges still to be resolved there is still a strong possibility an agreement will not be reached before year end.

Attention today turn to the Current Account balance ahead of tomorrow’s all-important monthly GDP print. Canadian current account balance prints -15.88B, while expectations were for -19.5B inline with previous monthly numbers. The loonie had a slight uptick against its trading peers.

 

 

 

  Euro

EUR / USD Expected Range: 1.1653-1.1700

The euro at the moment is trading on the back of strong fundamentals and Italian uncertainty. While it has bounced back against the USD over the last few weeks due to USD weakness and a little support from German data, there is a sense of déjà vu for the Eurozone with regards to the latest news of political risk. The Eurozone seems unable to escape these sort of events, and once again the threat has come from Italy. Following on from the elections earlier in the year, which ironically passed by without a lot of reaction or concern from the market, the current Italian coalition is causing headaches for the market with the expectation that its first budget could blow through the EU’s rules limiting public deficits to 3% of GDP. So far, the selloff has only been in Italian debt and not the euro itself with Italian ten-year yields hitting four-year highs.

The next point of resistance is the July 31st highs of 1.1750 and support is sitting at 1.1660.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2845-1.2901

The GBP/USD wobbled in early London trade as it rallied to touch 1.2934 before fizzling out and leading cable lower on the day at 1.2845. A newspaper report indicating that BoE governor Carney has been asked by the government to stay on an extra year to provide stability in the year after UK treasury denied Brexit.

Robust second-tier data out of the US ensured the London session highs were short-lived as the greenback strengthened against all majors. Although the data was second-tier, it reinforced the narrative that healthy growth is continuing in the US economy while price pressures also appear to be easing.

Brexit noise continues to plague the GBP with downside GBP/USD supports below the daily low of 1.2860 and 1.2835 with topside resistance in the 1.2895 and 1.2930 areas.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7291-0.7346

The Australian Dollar is steady this morning when valued against the US Dollar in what was a quiet night on currency markets. The Aussie reached a high of 0.7348 in the Asian session on the back of broad greenback weakness.

On the data front today, we had the release of Housing Industry Association (HIA) New Home Sales data for July sale rose 2.2%. Tomorrow the Australian Bureau of Statistics will release private sector capex data for the June quarter which is expected to rise 0.9%, leaving annual growth at 3.5%. On Thursday there’s also data on July building approvals.

From a technical perspective, the AUD/USD pair is currently trading at 0.7295. We continue to expect support to hold at these levels at the 0.7300 handle, while now any upward push will likely meet resistance around 0.7360.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6690-0.6719

he New Zealand dollars advance continued through trade on Tuesday extending beyond 0.67 as investors took advantage of broader US dollar weakness. Having flirted with moves above the 0.67 handle since Friday, the NZD pushed through to intraday highs at 0.6719 on renewed demand for risk appetite.

The Kiwi was buoyed by news the US and Mexico had reached an accord that would overhaul and replace the existing NAFTA agreement. While merely a bilateral agreement at this point it goes a long way to easing trade-related concerns and has prompted investors to unwind safe haven plays, bolstering demand for the New Zealand dollar.

Despite the renewed surge in risk appetite and break beyond resistance we still expect ongoing upside pressure on extended NZD rallies. A push toward 0.68 in the current environment will likely prompt profit taking as the gap between central bank interest rates and the outlook for monetary policy continues to weigh on the Kiwi. Attentions this week remain with Thursday Business Confidence print with interim direction driven by risk appetite flows.

 

 

 

Posted by OFX

Aussie dollar edges higher on improved risk appetite

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar is stronger this morning when valued against the US Dollar. The Aussie reached a high of 0.7356 overnight on the back of broad dollar’s weakness and a strong momentum in US equities.

On the data front today the macroeconomic calendar had nothing to offer today. Tomorrow will see the release of Housing Industry Association (HIA) New Home Sales data for July. On Thursday the Australian Bureau of Statistics will release private sector capex data for the June quarter which is expected to rise 0.9%, leaving annual growth at 3.5%. On Thursday there’s also data on July building approvals.

From a technical perspective, the AUD/USD pair is currently trading at 0.7349. We continue to expect support to hold on moves approaching 0.7300 while now any upward push will likely meet resistance around 0.7360.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0930 – 1.1030

The New Zealand dollar maintained a largely tight trading handle throughout Monday fluctuating between intraday lows at 0.6669 and session highs at 0.6703. In the absence of headline data sets the NZD took advantage of broader USD weakness and an upturn in demand for risk. News the US and Mexico had agreed a new bilateral trade agreement, coupled with increased intervention from the PBOC helped fuel further dollar downside and a correction from 12 month highs touched just 2 weeks ago.

The NZD is now poised for a break above resistance, flirting with moves beyond 0.67. While the USD advance has tempered somewhat significant upside remains stretched and moves beyond 0.67 and up to 0.68 will likely be hard won. With little of note on hand today attentions again remain with broader trade developments and general risk appetite, ahead of tomorrows ANZ business confidence print.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7410 – 1.7680

FX market activity was light yesterday given the summer bank holiday in the UK however GBP/USD still managed to capitalise on broad based USD weakness to open this morning’s Sydney session at 1.2895. GBP/USD climbed 0.4% on the day as the USD selloff continued; pushing the USD 0.4% lower against its G10 peers.

In the absence of any major UK data releases until September, traders will continue to monitor Brexit sentiment especially as UK politicians continue their preparations for a no deal Brexit. The lack of domestic data means markets will be taking cues from offshore releases, firstly in the form of US Q2 GDP and core consumption measures released out of the worlds biggest economy on Wednesday. Later in the week we will get some important Eurozone data through German unemployment numbers on Thursday and Eurozone Core CPI for august released on Friday.

Short term levels to watch for the GBP/USD can be seen at 1.2865 and 1.2825 on the downside with upside supports visible closer to 1.2920 and 1.2935 respectively.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7205 – 0.7380

The US Dollar continued where it left off, shedding another 0.4% on the US Dollar Index (DXY) to open this morning at 94.76. It was an eventful start to the week for the United States, with trade talks evolving with Mexico and Canada stealing the spotlight. Nevertheless, despite the new deals inked, the Greenback finds itself in negative territory.

The highlight for Monday was the news that the US and Mexico have reached an understanding on trade and taken the first step to a new free-trade agreement to replace NAFTA. Canada, the other original party is also set to join negotiations, although Trump was fairly dismissive of this, saying “we’ll see” to the suggestion. Overall, equity markets rallied across the US after the announcement although the Greenback conversely suffered. The impetus for the fall may be the increasing rhetoric from Trump on his primary trade war target. The new understanding with Mexico, and moratorium on the EU tariffs have led speculators to believe Trump is shoring up relationships and focusing all his attentions on the worlds second biggest economy, China. Tellingly, Trump commented in a speech in West Virginia that “China was on the way to be bigger than us in a very short period of time. That’s not going to happen anymore”. The declines are likely also impacted from the unwinding of aggregate long positions taken by speculators, with a number of forces conspiring to precipitate the falls, such as the dovish Fed statement and China’s active steps to stabilise the CNY.

The Greenback is again set to enjoy a quiet day on the economic calendar with little to excite markets. Nevertheless, attentions remain affixed to the evolving trade conversations and President Trump.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6250 – 0.6350

The Euro has drifted higher once again vs the U.S Dollar touching a four-week high of 1.1693. Sentiment in the market had improved which wasn’t great for the Dollar following the US-Mexico trade deal and the US to overhaul NAFTA (North American Free Trade Agreement). They will now likely re-engage with Canada to reach a final deal on NAFTA, a primary goal of the Trump administration.

German’s IFO Business Climate index surprisingly jumped up in August to 103.8 which beat July’s reading of 101.7, economist had forecasted a much smaller increase to 101.9. With U.S President Trump agreeing to refrain from imposing tariffs on European cars German companies have raised their business outlook and appear to be more confident.

Looking ahead we have low tier macroeconomic releases – M3 Money supply which measures the total quantity of domestic currency in circulation and deposited in banks, markets are expecting a 0.1% drop from 4.4% to 4.3%. Private Loans is also out which is expected to see a slight increase from 2.9% to 3.0%.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9430 – 0.9580

The Canadian Dollar moved higher against the Greenback after initially seeing USD/CAD resistance at 1.3050 in overnight movements. The Loonie then reacted positively on news that there was a possible agreement on NAFTA negotiations between the United States and Mexico. Talks are now expected to begin with Canada in a trilateral agreement to be reached by Friday with Prime Minister Justin Trudeau.

The Canadian Dollar moved immediately higher following Mondays announcement to reach two-month highs and up 0.6% as the USD/CAD saw 1.2955.

Next movements to impact the Canadian dollar will be the keenly watched Trade Balance and GDP Figures due to be released on both Wednesday and Thursday evening.

 

 

 

Posted by OFX

US and Mexico Ink a Deal ask Canada to Join

OFX Daily Market News

Posted by OFX

  United States Dollar

The US Dollar continued where it left off, shedding another 0.6% on the US Dollar Index (DXY) to open this morning at 94.55. It was an eventful start to the week for the United States, with trade talks evolving with Mexico and Canada stealing the spotlight. Nevertheless, despite the new deals inked, the Greenback finds itself in negative territory.

The highlight for Monday was the news that the US and Mexico have reached an understanding on trade and taken the first step to a new free-trade agreement to replace NAFTA. Canada, the other original party, is also set to join negotiations, although Trump was somewhat dismissive of this, saying “we’ll see” to the suggestion. Overall, equity markets rallied across the US after the announcement although the Greenback conversely suffered. The impetus for the fall may be the increasing rhetoric from Trump on his primary trade war target. The new understanding with Mexico and moratorium on the EU tariffs have led speculators to believe Trump is shoring up relationships and focusing all his attention on the world’s second biggest economy, China. Tellingly, Trump commented in a speech in West Virginia that “China was on the way to be bigger than us in a short period of time. That’s not going to happen anymore”. The declines are likely also impacted from the unwinding of aggregate long positions taken by speculators, with many forces conspiring to precipitate the falls, such as the dovish Fed statement and China’s active steps to stabilize the CNY.

The Greenback is again set to enjoy a quiet day on the economic calendar with little to excite markets. Nevertheless, attentions remain affixed to the evolving trade conversations and President Trump.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2861– 1.2945

The Canadian Dollar moved higher against the Greenback after initially seeing USD/CAD resistance at 1.3071 yesterday. The loonie then reacted positively on news that there was a bilateral agreement between the United States and Mexico. Talks are now expected to begin with Canada in trilateral cooperation’s between the three North American countries as Canada is pressured to come on board and sign the deal by Friday.

The Canadian Dollar moved immediately higher following Monday’s announcement to reach two-month highs and up 0.6% as the USD/CAD saw 1.2955 the 100-day moving average. Resistance now moves lower to 1.2987, and 1.3029 while support is seen at 1.2903 and 1.2841 the 200 DMA.

Next movements to impact the Canadian dollar will be the keenly watched Trade Balance and GDP figures due to be released on both Wednesday and Thursday morning.

 

 

 

  Euro

EUR / USD Expected Range: 1.1653-1.1750

The Euro has drifted higher once again vs. the U.S Dollar touching a four-week high of 1.1693. Sentiment in the market had improved which wasn’t great for the Dollar following the US-Mexico trade deal and the US to overhaul NAFTA (North American Free Trade Agreement). They will now likely re-engage with Canada to reach a final agreement on NAFTA, a primary goal of the Trump administration.

German’s IFO Business Climate index surprisingly jumped up in August to 103.8 which beat July’s reading of 101.7; economist had forecasted a much smaller increase to 101.9. With U.S President Trump agreeing to refrain from imposing tariffs on European cars German companies have raised their business outlook and appear to be more confident.

Looking ahead we have low tier macroeconomic releases – M3 Money supply which measures the total quantity of domestic currency in circulation and deposited in banks, markets are expecting a 0.1% drop from 4.4% to 4.3%. Private Loans is also out which is expected to see a slight increase from 2.9% to 3.0%.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2868-1.2945

FX market activity was light yesterday given the summer bank holiday in the UK, however, GBP/USD still managed to capitalize on broad-based USD weakness to open this morning’s North American session at 1.2897. GBP/USD climbed 0.4% on the day as the USD selloff continued; pushing the USD 0.4% lower against its G10 peers.

In the absence of any significant UK data releases until September, traders will continue to monitor Brexit sentiment especially as UK politicians continue their preparations for a no deal Brexit. The lack of domestic data means markets will be taking cues from offshore releases, firstly in the form of US Q2 GDP and core consumption measures released out of the world’s biggest economy on Wednesday. Later in the week, we will get some critical Eurozone data through German unemployment numbers on Thursday and Eurozone Core CPI for August released on Friday.

Short-term levels to watch for the GBP/USD can be seen with support at 1.2865 and 1.2825, and resistance at 1.2903 and 1.2945 respectively.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7321-0.7356

The Australian Dollar is stronger this morning when valued against the US Dollar. The Aussie reached a high of 0.7356 overnight on the back of broad dollar’s weakness and a definite risk on appetite in US equities.

On the data front today the macroeconomic calendar had nothing to offer today. Tomorrow will see the release of Housing Industry Association (HIA) New Home Sales data for July. On Thursday the Australian Bureau of Statistics will release private sector capex data for the June quarter which is expected to rise 0.9%, leaving annual growth at 3.5%. On Thursday there’s also data on July building approvals.

From a technical perspective, the AUD/USD pair is currently trading at 0.7349. We continue to expect support to hold on moves approaching 0.7300 while now any upward push will likely meet resistance around 0.7360.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6677-0.6715

The New Zealand dollar maintained a tight trading range throughout Monday fluctuating between intraday lows at 0.6669 and session highs at 0.6703. In the absence of headline, data sets the NZD took advantage of broader USD weakness and an upturn in demand for risk. News, the US and Mexico, had agreed a new bilateral trade agreement, coupled with increased intervention from the PBOC helped fuel further dollar downside and a correction from 12-month highs touched just two weeks ago.

The NZD is now poised for a break above resistance, flirting with moves beyond 0.67. While the USD advance has tempered somewhat significant upside remains stretched and moves beyond 0.67 and up to 0.68 will likely be hard won. With little of note on hand, today attention again continues with the broader trade developments and general risk appetite, ahead of tomorrow’s ANZ business confidence print.

 

 

 

Posted by OFX

Australian Dollar Rallies After Scott Morrison named PM

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar traded within a wide range this past week plunging on Friday to a weekly low of 0.7237 as Prime Minister Malcolm Turnbull suffered a leadership contest which ended with him stepping down and Scott Morrison becoming the new Prime Minister. The Aussie later recovered following Scott Morrison’s victory, settling around 0.7330.

On the data front this week and the economic calendar is relatively quiet to close out the month of August. On Wednesday will see the release of Housing Industry Association (HIA) New Home Sales data for July. On Thursday the Australian Bureau of Statistics will release private sector capex data for the June quarter which is expected to rise 0.9%, leaving annual growth at 3.5%. On Thursday there’s also data on July building approvals.

From a technical perspective, the AUD/USD pair is currently trading at 0.7329. We continue to expect support to hold on moves approaching 0.7300 while now any upward push will likely meet resistance around 0.7355.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0850 – 1.1050

The New Zealand dollar strengthened into the weekly close supported across various indicators and edging back toward 0.67. The Kiwi consolidated its recovery from mid-week lows below 0.6550 after the PBOC announced it would re-introduce measures to dampen currency volatility, protecting the CNY from a deeper correction and move through 7.0 and prompting an immediate one percent appreciation. The Kiwi followed suit with further support stemming from dovish Fed commentary and an uptick in commodity prices.

Fed Chair Jerome Powell affirmed the FOMC’s commitment to gradually tighter monetary policy but hinted that perhaps the pace and scale of hikes may not be as significant as first expected, suggesting the bank would pause the current cycle once a neutral setting is reached. This prompted a broader USD sell off adding support to the NZD and a push back toward 0.67.

With little of note on the domestic docket to start the week attentions turn to Wednesday’s business confidence report for macroeconomic direction. A further depreciation in business confidence could damage broader output and only dampening RBNZ appetite to tighten monetary policy. We expect resistance on moves approaching 0.67 and 0.68 with buying opportunities on moves below 0.6550.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7410 – 1.7710

The Great British Pound enjoyed mixed fortunes through trade on Friday edging higher against the USD while diving to 11-month lows against the Euro. Broader USD weakness helped Sterling push back through 1.2850 as investors tempered bets surrounding ongoing and sustained monetary policy tightening following Fed Chair Jerome Powell’s dovish Jackson Hole address.

Gains were however capped and the Pound dropped sharply against the Euro as fears a “No-Deal” Brexit loom ever larger. While UK ministers expect to meet an October deadline EU leaders optimism is ominously absent, suggesting an emergency summit will be needed in November if an exit agreement is to be reached. Pushing toward 0.9050 the Euro appears poised to extend gains as Brexit uncertainty continues to weigh on broader GBP direction.

With little macroeconomic data on hand today or through the week ahead attentions remain affixed to Brexit developments.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7205 – 0.7380

The US Dollar Currency Index (DXY) opens lower this morning at 95.16, after retreating half a percent. The impetus for the decline was an eventful week for the President with disparaging comments about the Federal Reserve driving the declines. Mid-level trade talks with Chinese counterparts also concluded last week with reports that nothing new is being added to the dialogue. Overall, US counterparts relished the softening USD with most currencies appreciating against it.

President Trump continues to be the catalyst for markets involving the Dollar. His comments regarding US monetary policy were sharply counter to the rhetoric from the independent Federal Reserve. The disconnect led to a broad sell-off in the USD, despite the fiercely independent nature of the Fed. Fed Chair Powell added to the conversation later in the week with his introductory statement at Jackson-Hole. While, the market interpreted his statement as mostly dovish in tone, he did reiterate his view that a gradual increase in Interest Rates was the best policy. Despite the confirmation from Powell’s speech, the market ultimately was skittish and continued its negative bias.

The market also kept a close eye on on-going mid-level trade talks with China that ultimately added little to the dialogue. Tensions remain high between the two largest economies with market concerns of an escalating Trade War increasing, although there was little impact on markets.

To start the week, the Greenback enjoys a mostly quiet economic calendar. Again the focus remains fixed on the Headlines with President Trump under increasing political pressure.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6250 – 0.6350

The Euro moved 1.6% higher against the U.S Dollar last week being one of the top performers out of the G10 currencies. The pair moved from lows 1.1437 and closed the week at 1.1619 – a 2-week high. The main driver behind the Euro’s strength has been broad US dollar weakness following Trumps criticism last week on the Federal Reserve’s Chairman’s decision over its higher rates policy. Trump is after a lower Greenback and believes the Dollar is getting far too expensive.

On the data front, the preliminary August Markit PMI for the EU indicated that the economy continued to grow edging higher from 54.3 in July to 54.4 in August. Consumer confidence fell to -1.9 in August, from -0.5 in July. It was the fourth consecutive monthly decline, taking consumer confidence to its lowest in 15 months.

Looking ahead, the calendar is quite busy this week with German and EU CPI the most notable. Todays see German Ifo Business Climate change which is based on surveyed manufacturers, builders, wholesalers, services, and retailers. The recent momentum in Germany’s Ifo survey suggests further downside risks to Germany and by extension Euro-area growth momentum during the remainder of this year. Unless the Ifo index picks up from today’s levels, it indicates further downside risks to current growth estimates for the Euro area.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9430 – 0.9580

The Canadian Dollar is higher this morning when valued against the US Dollar. The CAD rebounded off a one week low of 1.3100 on Friday following an increase in risk appetite and sell off on the greenback following Federal Reserve Chairman Jerome Powell Jackson hole comments that inflation remains subdued below the target rate of 2%.

Bank of Canada’s Governor Stephen Poloz used his speech at the annual Jackson Hole Symposium to calm markets by saying that he is not worried about inflation levels climbing above its target range whereby it hit seven-year highs in July of 3% on a year-on-year basis.

The remarks did not stop investors buying the Loonie as it gapped on open to 1.3025 this morning as it is widely expected that the Bank of Canada will increase interest rates in October and is currently priced in at a 90% chance.

The USD/CAD currently trades this morning at 1.3015.

 

 

 

Posted by OFX

Dollar Index Remains Firm in the Wake of a Dovish Fed

OFX Daily Market News

Posted by OFX

  United States Dollar

The US Dollar Currency Index (DXY) opens lower this morning at 95.25, after retreating half a percent. The impetus for the decline was an eventful week for the President with disparaging comments about the Federal Reserve driving the declines. Mid-level trade talks with Chinese counterparts also concluded last week with reports that nothing new is being added to the dialogue. Overall, US counterparts relished the softening USD with most currencies appreciating against it.

President Trump continues to be the catalyst for markets involving the Dollar. His comments regarding US monetary policy were sharply counter to the rhetoric from the independent Federal Reserve. The disconnect led to a broad sell-off in the USD, despite the fiercely independent nature of the Fed. Fed Chair Powell added to the conversation later in the week with his introductory statement at Jackson-Hole. While the market interpreted his statement as mostly dovish in tone, he did reiterate his view that a gradual increase in Interest Rates was the best policy. Despite the confirmation from Powell’s speech, the market ultimately was skittish and continued its negative bias.

The market also kept a close eye on on-going mid-level trade talks with China that ultimately added little to the dialogue. Tensions remain high between the two largest economies with market concerns of an escalating Trade War increasing, although there was little impact on markets. To start the week, the Greenback enjoys a mostly quiet economic calendar.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2987– 1.3072

The Canadian Dollar is higher this morning when valued against the US Dollar. The CAD rebounded off a one week low of 1.3100 on Friday following an increase in risk appetite and sold off on the greenback following Federal Reserve Chairman Jerome Powell Jackson hole comments that inflation remains subdued below the target rate of 2%.

Bank of Canada’s Governor Stephen Poloz used his speech at the annual Jackson Hole Symposium to calm market participants by saying that he is not worried about inflation levels climbing above its target range whereby it hit seven-year highs in July of 3% on a year-on-year basis.

The remarks did not stop investors buying the loonie as it gapped on opening to 1.3004 this morning as it is widely expected that the Bank of Canada will increase interest rates in September and is currently priced in at a 90% chance. The USD/CAD currently trades this morning at 1.3050.

 

 

 

  Euro

EUR / USD Expected Range: 1.1594-1.1653

The Euro moved 1.6% higher against the U.S Dollar last week being one of the top performers out of the G10 currencies. The pair moved from lows 1.1437 and closed the week at 1.1619 – a 2-week high. The primary driver behind the Euro’s strength has been broad US dollar weakness following Trump’s criticism last week on the Federal Reserve’s Chairman’s decision over its higher rates policy. Trump is after a lower greenback and believes the dollar is getting far too expensive.

On the data front, the preliminary August Markit PMI for the EU indicated that the economy continued to grow, edging higher from 54.3 in July to 54.4 in August. Consumer confidence fell to -1.9 in August, from -0.5 in July. It was the fourth consecutive monthly decline, taking consumer confidence to its lowest in 15 months.

The economic calendar is quite busy this week with German and EU CPI the most notable. Today we had German Ifo Business Climate change which is based on surveyed manufacturers, builders, wholesalers, services, and retailers. German Ifo survey released higher than the previous 101.7 and forecasts of 102.5 and posted an expansion number of 103.8. The recent momentum in Germany’s Ifo survey suggests further upside to Germany and by extension Euro-area growth momentum during the remainder of the quarter. Market participants are starting to question if the current upside trend will continue, if one starts to factor in trade tensions and Brexit.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2828-1.2868

The Great British Pound enjoyed mixed fortunes through trade on Friday edging higher against the USD while diving to 11-month lows against the Euro. Broader USD weakness helped Sterling push back through 1.2850 as market participants tempered bets surrounding ongoing and sustained monetary policy tightening following Fed Chair Jerome Powell’s dovish Jackson Hole address.

Gains were muted, and the Pound dropped sharply against the Euro as fears a “No-Deal” Brexit loom ever more significant. While UK ministers expect to meet an October deadline EU leaders optimism is ominously absent, suggesting an emergency summit will be needed in November if an exit agreement is to be reached. Pushing toward 0.9050 the Euro appears poised to extend gains as Brexit uncertainty continues to weigh on broader GBP direction.

With little macroeconomic data on hand, today or through the week ahead attentions remain affixed to Brexit developments.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7307-0.7346

The Australian Dollar traded within a wide range this past week plunging on Friday to a weekly low of 0.7237 as Prime Minister Malcolm Turnbull suffered a leadership contest which ended with him stepping down and Scott Morrison becoming the new Prime Minister. The Aussie later recovered following Scott Morrison’s victory, settling around 0.7330.

On the data front, this week and the economic calendar is relatively quiet to close out the month of August. On Wednesday will see the release of Housing Industry Association (HIA) New Home Sales data for July. On Thursday the Australian Bureau of Statistics will release private sector capex data for the June quarter which is expected to rise 0.9%, leaving annual growth at 3.5%. On Thursday there’s also data on July building approvals.

From a technical perspective, the AUD/USD pair is currently trading at 0.7316. We continue to expect support to hold on moves approaching 0.7300 while now any upward push will likely meet resistance around 0.7355.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6670-0.6702

The New Zealand dollar strengthened into the weekly close supported across various indicators and edging back toward 0.67. The Kiwi consolidated its recovery from mid-week lows below 0.6550 after the PBOC announced it would re-introduce measures to dampen currency volatility, protecting the CNY from a more profound correction and move through 7.0 and prompting an immediate one percent appreciation. The Kiwi followed suit with further support stemming from dovish Fed commentary and an uptick in commodity prices.

With little of note on the domestic docket to start the week attentions turn to Wednesday’s business confidence report for macroeconomic direction. Further depreciation in business confidence could damage broader output and only dampening RBNZ appetite to tighten monetary policy. We expect resistance on moves approaching 0.67 and 0.68 with buying

 

 

 

Posted by OFX

Trump comments on FED and Greece exits its bailout after 8 years

OFX Daily Market News

Posted by OFX

  United States Dollar

The market saw outflows from the USD during last weeks opening sessions, 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.

Following this, the Federal Reserve released its latest minutes midweek, which showed that the FOMC is expected to continue to raise rates as needed. The initial reaction for the USD saw it sell-off, perhaps due to the fact that the Fed admitted they were concerned that GDP could slow in the second half of the year due to continuing trade disputes.

On the trade war front, US and Chinese officials began further trade talks in Washington and at midnight last night, the latest $16 billion worth of tariffs on Chinese imports went into effect. The expectations on the ongoing trade talks between the US and China the world’s two largest economies are low as they are taking place between lower-level officials.

Ending the week, the US has a slew of data releases, which included slightly hawkish numbers as both Continuing Jobless Claims and Initial Jobless Claims posted a better than expected result. Initial Jobless claims dropped to 210K from last weeks 212k vs. expectations of 217K.

 

 

 

  Canadian Dollar

The Canadian dollar began last week trading on broader market sentiment with base metals and energy prices on the rise. Gold and WTI both saw gains; Iranian sanctions imposed by the US are causing global oil giants to cut lucrative energy projects in Iran.

In other news, the Bank of Canada’s Senior Deputy Carolyn A. Wilkins outlined growing confidence in the macroprudential measures which she suggests, has improved the quality of household debt, in a speech on Tuesday. 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.

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

 

 

 

  Euro

Big news in Europe last week! After eight years, a lot of political maneuvering and €289bn later, Greece has now exited its bailout programme meaning it can now borrow funds once again on the capital market. For the Euro, which has been dipping into one-year lows of EUR/USD 1.13, the risk still remains in Turkey. Indeed one facet for the Euros slide to 1.13 were fears that Italy and Spain could be overexposed to Turkish debt. Currently, the market isn’t sold on the policies of President Erdogan and finance minister Albayrak with credit agencies S&P and Moody’s both cutting Turkey debt rating deeper into junk status.

Another key piece of news came out of Germany and German Bundesbank President and ECB member Jens Weidman, who has long be known as an interest rate hawk, once again reiterated his desire to exit the ultra-loose monetary policy that the ECB is currently employing and not delay the return to neutral rates. Weidman has also long been seen as the natural successor to Mario Draghi and the forerunner, however, there are now reports that Angela Merkel pushing for a German to have the top job at the EU Commission rather than the ECB (one country can’t hold both roles).

The EUR closed the week at 0.86 versus its US counterpart.

 

 

 

  British Pound

With the markets bereft of any concrete UK data to dig their teeth into between now and the end of the month, last weeks Brexit negotiations were a key focus of investors. As we had seen in the previous week, Brexit risks are still weighing on the pound and any more talk of disagreements, breakdown in negotiations or diverging ideologies will add to the drag on the sterling (even no news whatsoever will be perceived as negative). According to UK Brexit Minister Dominic Raab securing a Brexit deal is still the most likely outcome for the UK, however, Dr. Liam Fox’s comments are still ringing in the ears of many. The UK has until October to finalise negotiations, a date that is getting closer and closer.

 

 

 

  Australian Dollar

The Australian Dollar managed to hold above 73c vs the U.S Dollar for the majority of last weeks trading sessions amid comment from President Trump on the back of an exclusive interview with Reuters. In it, Trump stated 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. Despite this, optimistic comments from Chinese officials, in the face of Presidents Trump’s view that it was unlikely for them to reach an agreement, supported the local unit. The 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.

On the data front, midweek saw modest gains before a slight correction, after the release of the RBA monthly Minutes where Governor Philip Lowe raised confidence amongst investors. He reiterated that the RBA will 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”.

 

 

 

  New Zealand Dollar

The Kiwi received an unexpected boost to begin last week as equity markets saw a slight move higher as calm was restored in the short term for Turkey, emerging markets and trade talks between the United States and China.

Furthermore, President Donald Trump 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 and the Kiwi rallied as a result.

On the data front, we saw a bullish retail sales reading for the 2nd quarter of 2018. The seasonally adjusted reading of 1.1%, was a full 0.8% higher than the previous quarter, showing a more robust outlook for the local economy and pushed the NZD to a two-week high of 0.6718. The Core retail sales reading which excludes vehicle and fuel categories also showed a strong reading of 1.4% versus a forecast of 0.8% and points towards a stronger print for GDP figures due for release on September 20th.

 

 

 

Posted by OFX

Trump comments on FED and Greece exits its bailout after 8 years

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar managed to hold above 73c vs the U.S Dollar for the majority of last weeks trading sessions amid comment from President Trump on the back of an exclusive interview with Reuters. In it, Trump stated 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. Despite this, optimistic comments from Chinese officials, in the face of Presidents Trump’s view that it was unlikely for them to reach an agreement, supported the local unit. The 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.

On the data front, midweek saw modest gains before a slight correction, after the release of the RBA monthly Minutes where Governor Philip Lowe raised confidence amongst investors. He reiterated that the RBA will 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”.

 

 

 

  New Zealand Dollar

The Kiwi received an unexpected boost to begin last week as equity markets saw a slight move higher as calm was restored in the short term for Turkey, emerging markets and trade talks between the United States and China.

Furthermore, President Donald Trump 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 and the Kiwi rallied as a result.

On the data front, we saw a bullish retail sales reading for the 2nd quarter of 2018. The seasonally adjusted reading of 1.1%, was a full 0.8% higher than the previous quarter, showing a more robust outlook for the local economy and pushed the NZD to a two-week high of 0.6718. The Core retail sales reading which excludes vehicle and fuel categories also showed a strong reading of 1.4% versus a forecast of 0.8% and points towards a stronger print for GDP figures due for release on September 20th.

 

 

 

  British Pound

With the markets bereft of any concrete UK data to dig their teeth into between now and the end of the month, last weeks Brexit negotiations were a key focus of investors. As we had seen in the previous week, Brexit risks are still weighing on the pound and any more talk of disagreements, breakdown in negotiations or diverging ideologies will add to the drag on the sterling (even no news whatsoever will be perceived as negative). According to UK Brexit Minister Dominic Raab securing a Brexit deal is still the most likely outcome for the UK, however, Dr. Liam Fox’s comments are still ringing in the ears of many. The UK has until October to finalise negotiations, a date that is getting closer and closer.

 

 

 

  United States Dollar

The market saw outflows from the USD during last weeks opening sessions, 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.

Following this, the Federal Reserve released its latest minutes midweek, which showed that the FOMC is expected to continue to raise rates as needed. The initial reaction for the USD saw it sell-off, perhaps due to the fact that the Fed admitted they were concerned that GDP could slow in the second half of the year due to continuing trade disputes.

On the trade war front, US and Chinese officials began further trade talks in Washington and at midnight last night, the latest $16 billion worth of tariffs on Chinese imports went into effect. The expectations on the ongoing trade talks between the US and China the world’s two largest economies are low as they are taking place between lower-level officials.

Ending the week, the US has a slew of data releases, which included slightly hawkish numbers as both Continuing Jobless Claims and Initial Jobless Claims posted a better than expected result. Initial Jobless claims dropped to 210K from last weeks 212k vs. expectations of 217K.

 

 

 

  Euro

Big news in Europe last week! After eight years, a lot of political maneuvering and €289bn later, Greece has now exited its bailout programme meaning it can now borrow funds once again on the capital market. For the Euro, which has been dipping into one-year lows of EUR/USD 1.13, the risk still remains in Turkey. Indeed one facet for the Euros slide to 1.13 were fears that Italy and Spain could be overexposed to Turkish debt. Currently, the market isn’t sold on the policies of President Erdogan and finance minister Albayrak with credit agencies S&P and Moody’s both cutting Turkey debt rating deeper into junk status.

Another key piece of news came out of Germany and German Bundesbank President and ECB member Jens Weidman, who has long be known as an interest rate hawk, once again reiterated his desire to exit the ultra-loose monetary policy that the ECB is currently employing and not delay the return to neutral rates. Weidman has also long been seen as the natural successor to Mario Draghi and the forerunner, however, there are now reports that Angela Merkel pushing for a German to have the top job at the EU Commission rather than the ECB (one country can’t hold both roles).

The EUR closed the week at 0.86 versus its US counterpart.

 

 

 

  Canadian Dollar

The Canadian dollar began last week trading on broader market sentiment with base metals and energy prices on the rise. Gold and WTI both saw gains; Iranian sanctions imposed by the US are causing global oil giants to cut lucrative energy projects in Iran.

In other news, the Bank of Canada’s Senior Deputy Carolyn A. Wilkins outlined growing confidence in the macroprudential measures which she suggests, has improved the quality of household debt, in a speech on Tuesday. 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.

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

 

 

 

Posted by OFX

The USD is trading lower against its G10 counter parts today

OFX Daily Market News

Posted by OFX

  United States Dollar

The USD is trading lower against its G10 counter parts today. The focus today will be on Fed Chairman Powell’s Jackson Hole Comments at 10:00 am EST. The FOMC minutes released on Wednesday confirmed the prospect for a rate hike in September so the market will be looking to see whether the Chairman’s comments will address the Fed’s policy outlook. Overall Jackson Hole may turn out to be a low key event for the market as the BoJ Governor Abe and no senior ECB policy markets will be participating in the discussion panel tomorrow.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3049-1.3103

The CAD is trading relatively flat against the USD today. A renewal in market risk appetite is helping to support the Lonnie against the USD. BoC Governor Poloz is scheduled to be interviewed at 4:15 pm EST after Fed Chair Powell’s speech at 10:00 am EST. Risk is on the upside for the CAD as Poloz’s speech is expected to hold a confident tone as the recent series of data confirms the need for higher rates despite the ongoing NAFTA talks.

 

 

 

  Euro

EUR / USD Expected Range: 1.1535-1.1605

The EUR is also trading relatively flat today. German Q2 GDP data was in line with previous reports. The data shows domestic demand supporting overall growth which suggest a rebound in the Eurozone growth. Local Italian press reported that President Trump told Italian PM Conte that the US is willing to help Italy by buying Italian government bonds as Italy looks to refinance its debit next year.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2800-1.2861

The government has released a series of technical or advisory notes yesterday a move, which was meant to placate concerns but was met with lukewarm reception. The reminder of Brexit uncertainty is a surefire way to cause the pound to weaken.

The Sterling is finding a firmer footing heading into the North American trading session. The only economic data that released was BBA Loans for House Purchase in July, which was a disappointment printing at 39584

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7238-0.7314

The Australian Dollar when valued against the worlds 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 will 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 yesterday’s North American session touched a high of 0.7381 as the Greenback continued to extend its downward fall 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.

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: 0.6620-0.6671

The New Zealand Dollar was supported by further weakness from the US Dollar overnight as the kiwi touched 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 key longer-term support level.

New Zealand trade balance figures surprised many by coming out much better than expected. Many forecasters had anticipated exports to shrink as a result of the ongoing trade wars but this was not the case. Indeed it may seem that a lot of exporters or importers from elsewhere have been front loading their orders before the tariffs take full effect. This is not uncommon and something we saw recently with US GDP coming out much greater than expected a few weeks ago. The net result was no change for the New Zealand dollar.

 

 

 

Posted by OFX

Aussie flat around 0.7350 levels

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar moved within a 20-pip range on Wednesday between levels of 0.7350 and 0.7370 and despite the Australian Bureau of Statistics releasing the official constriction work done figures showing a 1.6 per cent rise in the June quarter the Aussie didn’t budge. Total building work on homes was up 3.1 per cent in the three months, while work on non-residential buildings grew by a more modest 1.3 per cent.

Meanwhile at the Economic Society of Australia Business Luncheon in Brisbane, Deputy Governor Debelle said in a speech he expected inflation to remain around 2.25% at least for the next couple of years.

Despite all of the US news coverage regarding former Trump campaign manager and the former Presidents lawyer the Greenback hasn’t been affected, in fact it has remained well supported as the Fed Minutes confirmed they remain on track for a hike next month.

There is no local data due out today and investors will be keenly attuned to the annual Jackson Hole gathering where in attendance will be central bankers, finance ministers, academics, and financial market participants from around the world.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0950– 1.1050

The New Zealand Dollar traded in a fairly muted sideways pattern yesterday, maintaining a forty-point range over the past twenty-four hours. Opening the morning just below the US 67 cent handle, the Kiwi was initially bolstered by a bullish retail sales reading for the 2nd quarter of 2018.

The seasonally adjusted reading of 1.1%, was a full 0.8% higher than the previous quarter, showing a more robust outlook for the local economy and pushed the NZD to a two-week high of 0.6718.

The Core retail sales reading which excludes vehicle and fuel categories also showed a strong reading of 1.4% versus a forecast of 0.8% and points towards a stronger print for GDP figures due for release on September 20th.

The NZD/USD was eventually sold off in the European session to an overnight low of 0.6880 before the greenback was slightly sold off following the release of FOMC minutes this morning after noting GDP Growth would slow in the second half of 2018. The key points were that many participants said it would likely “Soon” be appropriate to raise interest rates. It is widely expected that the Fed will increase in September with the markets pricing in a 96% chance.

The New Zealand dollar eventually settled just below the US 67 cent mark again as little on the domestic docket today is likely to push the domestic currency either way.

Looking forward to tomorrow, market participants look toward the release of Julys Trade Balance figures as the New Zealand dollar currently swaps hands at 0.6700.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7500 – 1.7700

The Great British Pound edged marginally higher through trade on Wednesday, consolidating early week gains and maintaining a tight trading handle for much of the day. Having broken back above 1.29 on Tuesday the pound held onto gains touching two-week highs at 1.2935.

After making new 14 month lows last Wednesday Sterling has found support breaking a 6 week run of losses on broader USD weakness and an uptick in Brexit optimism. British and EU officials commenced fresh talks this week sparking renewed hope an agreement will be reached by the next deadline in October. While mixed messages are filtering through with EU officials sceptical the original divorce date will be met British Brexit ministers are confident an agreement can be negotiated sparking near term optimism and driving short term support. Said gains are highly conditional to ongoing Brexit upside and the pound remains vulnerable to a sudden shift in optimism.

With little of note on the macroeconomic docket out focused remains with the Brexit narrative. A key driver through this week and the short term will be the release of a report from the May government that analyses the consequences of a “NO DEAL” Brexit. The report is due before the end of the week. Watch resistance on moves approaching 1.30 and support at last weeks 14 month low.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7300 – 0.7400

Overnight US equities closed slightly lower as the S&P 500 hit its 3,453rd day without a major correction. It’s now the longest bull market in history. US and Chinese officials began further trade talks in Washington. This Thursday, the latest $16 billion worth of tariffs on Chinese imports will go into effect, expectations for the meetings are low, since they are taking place between lower-level officials

On the data front yesterday saw the release of US released July Existing Home Sales figures, which by the way, disappointed by falling 0.7% vs. an expected advance of 0.6%. Federal Open Market Committee (FOMC) minutes hinted a September rate hike, but added a dovish note, as concerns over how trade disputes could disrupt growth have increased.

From a technical perspective, the EUR/USD pair extended its rally overnight reaching a high of 1.1622. The USD/JPY pair also traded higher reaching an overnight high of 110.61. The Pound Sterling advanced to a fresh weekly high of 1.2935.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6300 – 0.6380

The Euro continued its upward trajectory, posting modest gains in overnight trading. Opening this morning at 1.1597 against the US Dollar, the Euro looks fairly reactionary at present, turning to its counterpart for direction. Domestically, the economic calendar remains light-on.

The biggest news to impact the Euro was President Trump’s announcement that he would slap a 25% tariff on all cars from the European Union. Immediately the market responded with a small decline to kick off the session. Fortunes improved for the Euro however when the FOMC released their meeting minutes. The primary focus was that the September rate hike is almost 100% nailed on and that the FOMC has deepening concerns on trade disruptions. The market responded to the meeting minutes negatively, with the USD marginally falling across the board. Overall, it was a day of marginal movements and trading conditions continued to be light.

Moving into Thursday, the Euro is slated to enjoy a bit more data with the PMI figures slated for release. Traders will also be keeping a close eye on the on-going political drama enfolding in the United States.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9500 – 0.9600

The Canadian Dollar is weaker this morning when valued against the US Dollar. The USD/CAD pair slumped after the release of dismal retail sales data. Following a 2.2% increase in May, retail sales edged down 0.2% in June to $50.7 billion. Sales were down in 6 of 11 subsectors, representing 52% of total retail trade.

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.

From a technical perspective, the USD/CAD pair is currently trading at 1.2994. We continue to expect support to hold on moves approaching 1.2959 while now any upward push will likely meet resistance around 1.3048.

 

 

 

Posted by OFX

FOMC Minutes has the Market Pricing in another Rate Hike from the Fed In December

OFX Daily Market News

Posted by OFX

  United States Dollar

Yesterday the Federal Reserve released its latest minutes which showed that the FOMC is expected to continue to raise rates as needed. The initial reaction for the USD saw it sell-off, perhaps due to the fact that the Fed admitted they were concerned that GDP could slow in the second half of the year due to continuing trade disputes. US equities closed slightly lower yesterday as the S&P 500 hit its 3,453rd day without a significant correction. It’s now the most extended bull market in history. US and Chinese officials began further trade talks in Washington. At midnight last night, the latest $16 billion worth of tariffs on Chinese imports went into effect. The expectations on the ongoing trade talks between the US and China the world’s two largest economies are low as they are taking place between lower-level officials.

The US has a slew of data released this morning, slightly hawkish numbers as both Continuing Jobless Claims and Initial Jobless Claims both posted a better data than previous. Initial Jobless claims dropped to 210K from last weeks 212k vs. expectations of 217K. Markit Service and Composite PMI figures are due out shortly along with Markit Manufacturing PMI economist are forecasting better numbers than previous.

From a technical perspective, the EUR/USD pair extended its rally overnight reaching a high of 1.1622 which has since pulled back below the 1.16 handle. The USD/JPY pair also traded higher reaching an overnight high of 110.91. The Pound Sterling advanced to a fresh weekly high of 1.2935 before it to had a reversed course action and fell below the 1.29 handle. The Jackson Hole Symposium begins today; being one of the longest-standing central banking conferences in the world. It gives central bankers and attendees the opportunity to foster open discussion on global economic conditions and the year’s topic.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2987 – 1.3171

The Canadian Dollar is weaker this morning when valued against the US Dollar. The USD/CAD pair slumped after the release of dismal retail sales data. Following a 2.2% increase in May, retail sales edged down 0.2% in June to $50.7 billion. Sales were down in 6 of 11 subsectors, representing 52% of total retail trade.

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

From a technical perspective, the USD/CAD pair is currently trading at 1.3071. We continue to expect support to hold on moves approaching 1.3029 and 1.2987 while now any upward push will likely meet resistance around 1.3114.

 

 

 

  Euro

EUR / USD Expected Range: 1.1542 – 1.1622

The Euro continued its upward trajectory, posting modest gains in overnight trading. Opening this morning at 1.1561 against the US Dollar, the Euro looks relatively reactionary at present, turning to its counterpart for direction. Domestically, the economic calendar remains light-on.

The biggest news to impact the Euro was President Trump’s announcement that he would slap a 25% tariff on all cars from the European Union. Immediately the market responded with a small decline to kick off the session. Fortunes improved for the Euro however when the FOMC released their meeting minutes. The primary focus was that the September rate hike is almost 100% priced in, even as the FOMC has significant concerns on trade disruptions. The market responded to the meeting minutes negatively, with the USD marginally falling across the board. Overall, it was a day of limited movements, and trading conditions continued to be light.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2850 – 1.2929

The Great British Pound edged marginally higher through trade on Wednesday, consolidating early week gains and maintaining a tight trading handle for much of the day. Having broken back below 1.29 in the European session the pound relinquished the gains it made yesterday touching a two-week high of 1.2935.

After making new 14 month lows, last Wednesday Sterling has found support breaking a six week run of losses on broader USD weakness and an uptick in Brexit optimism. British and EU officials commenced fresh talks this week sparking renewed hope the next deadline will reach an agreement in October. While mixed messages are filtering through with EU officials are skeptical the original divorce date will be met. British Brexit ministers are confident a deal can be negotiated sparking near-term optimism and driving short-term support. Said gains are highly conditional to the ongoing Brexit upside and the pound remains vulnerable to a sudden shift in confidence.

With little of note on the macroeconomic docket out focused remains with the Brexit narrative. A key driver through this week and the short term will be the release of a report from the May government that analyses the consequences of a “NO DEAL” Brexit. The report is due before the end of the week. Watch resistance on moves approaching 1.30 and support at last weeks 14 month low.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7272-0.7357

The Australian Dollar moved within a 20-pip range on Wednesday between levels of 0.7350 and 0.7370 and despite the Australian Bureau of Statistics released the official constriction work done figures showing a 1.6 percent rise in the June quarter the Aussie didn’t budge. Total building work on homes was up 3.1 percent in the three months, while work on non-residential buildings grew by a more modest 1.3 percent.

Meanwhile, at the Economic Society of Australia Business Luncheon in Brisbane, Deputy Governor Debelle said in a speech he expected inflation to remain around 2.25% at least for the next couple of years. Despite the fact that all of the US news coverage regarding former Trump campaign manager and the former Presidents lawyer the Greenback hasn’t been affected, it has remained well supported as the Fed Minutes confirmed they stay on track for a hike next month.

There is no local data due out today, and investors will be keenly attuned to the annual Jackson Hole gathering where in attendance will be central bankers, finance ministers, academics, and financial market participants from around the world

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6663-0.6705

The New Zealand Dollar traded in a relatively muted sideways pattern yesterday, maintaining a forty-point range over the past twenty-four hours. Opening the morning below the US 67 cent handle, the Kiwi was initially bolstered by a bullish retail sales reading for the 2nd quarter of 2018.

The seasonally adjusted reading of 1.1%, was a full 0.8% higher than the previous quarter, showing a more robust outlook for the local economy and pushed the NZD to a two-week high of 0.6718. The Core retail sales reading which excludes vehicle and fuel categories also showed a steady reading of 1.4% versus a forecast of 0.8% and points towards a stronger print for GDP figures due for release on September 20th.

Looking forward to tomorrow, market participants look toward the release of Julys Trade Balance figures as the New Zealand dollar currently swaps hands at 0.6700.

 

 

 

Posted by OFX