Australian Dollar holds steady at 71 US cents

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar saw limited movements to start the week, holding steady at support levels of 71 US Cents. Opening the morning treading water on renewed trade concerns between the United States and China, the AUD/USD was muted as traders ignored the release of China’s CPI print for the month of August which came in unexpectantly higher at an annualised rate of 2.3%.

The Aussie extended to intraday highs during the European session of 0.7130 with gains eventually paired back to test the 0.71 handle during North American trade as the greenback continued to trade higher off the positive Non-Farm Payroll release on Friday evening.

With the deteriorating Australian dollar continuing to face pressure from news both domestically and abroad, a further test of support at 71 US cents could possibly occur with the release of NAB business confidence levels this morning which has eased in the previous months this year.

The Australian Dollar opens this morning at 0.7110.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0820 – 1.0980

The NZD traded in a narrow range overnight, anchored between 0.6520 and 0.6545 before retracing and consolidating slightly higher than last week’s 30-month lows at 0.6525. The Kiwi also shed 30 pips against its Australian counterpart with the likely catalyst for the movements being a slight elevation in risk appetite given commentary out of Europe.

In what is a quiet week on the domestic data front for the Kiwi, the domestic unit will continue to take its cues from offshore datasets and developments in global risk sentiment. Of particular interest to NZD/USD traders will be CPI and PPI measures out of the world’s largest economy later this week which are set to be followed up by retail sales numbers for august on Friday. With the interest rate differential between the 2 currencies continuing to move in favour of the greenback, any upside surprises in these reads will likely put the Kiwi on the back foot as markets adjust their rate hike expectations.

On the technical front, key psychological support is located at the 0.6500 level with resistance is pegged at levels nearer to 0.6565 and 0.6600 respectively.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.8030 – 1.8530

The Great British rose against the dollar on Monday after the European Union’s top negotiator Michel Barnier said an agreement for Britain to leave the economic bloc might be reached in the coming weeks. Following the news the GBP/USD pair jumped pass 1.3000 level mid-European morning, reaching a 5-week high of 1.3051.

On the local data front yesterday Gross Domestic Product (GDP) accelerated in the month of July, courtesy of a sharp rise in motor trading, lifting output to its quickest pace in nearly a year. GDP expanded by 0.3% in the month of July, above the MNI median forecast of a 0.2% rise, after a 0.1% rise in June. That took growth in the three months to July to 0.6%. Industrial Production also rose by less-than-expected In July, up by just 0.1% MoM, while manufacturing output contracted 0.2%. Looking ahead today we will see the release of UK Jobless Rate which is expected to remain at 4.00%.

From a technical perspective, the USD/GBP pair is currently trading at 1.3024. We continue to expect support to hold on moves approaching 1.2985 while now any upward push will likely meet resistance around 1.3050.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7030 – 0.7230

The US Dollar retreated marginally in overnight trading, losing some ground against most of the currencies as investors digested the news over the weekend. The US Dollar Index (DXY) shed 0.27% on the day to open at 95.15 against a basket of currencies.

With little on the economic calendar to drive markets, the Greenback took stock of current market conditions and traded within a tight range for much of the session. Between a surprisingly strong jobs report and a further escalation in the US-China trade war, the Dollar took the initiative early in the week and extended its gains from Friday only to slowly lose some of that ground throughout the American session. Nevertheless, the USD remains firmly on the front foot, moving into Tuesday.

The catalyst for the DXY retreat came from Europe with the Sterling and Euro both appreciating marginally against the Greenback after EU Chief Negotiator Barnier noted a potential timeline for a Brexit Deal. The Fibre and Pound both shot higher, boosted on the hopes that a Brexit deal could be agreed as early as six to eight weeks from now. Commodity currencies however didn’t fare so well with the CAD, NZD and AUD among the worst performers of the day and with no respite in sight.

Moving into Tuesday, investors again turn to the headlines with only a quiet economic calendar to contend with.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6080 – 0.6180

The Euro edged higher through trade on Monday creeping back through 1.16 to touch intraday highs at 1.1612. With little domestic data on hand to drive direction attentions were focused squarely on resuming US and European trade talks. The market found confidence in reports negotiations were moving forward, with the Trump and the US Trade Representative office seeking to commence Congressional consultations in a bid to fast track preliminary deals ahead of a November follow up.

While there were broader concerns Trump would renege on promises to waylay tariffs on EU automakers a promise from EU negotiators to import more LNG and soybeans seems to have placated the President for the time being and a move to securing longer term outcomes appears plausible moving into he end of the Year.

With little headline data on hand to drive direction through trade on Tuesday our attentions remain with ongoing trade developments ahead of the ECB policy announcement Thursday. With broader USD upside still intact we expect investors will continue to sell into rallies above 1.16/1.1650 while short term support holds firm on moves approaching 1.1350.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9330 – 0.9430

The Canadian dollar edged marginally higher through trade on Monday bouncing off 7-week lows to maintain a narrow band in the absence of headline data events. With little developments in ongoing NAFTA negotiations the Loonie struggled to break outside broader holding patterns, bouncing between 0.7560 and 0.7603. As ongoing discussion appear to have stalled the Loonie has found support in an ongoing Hawkish undertone proffered by the Bank of Canada and an open possibility the monetary policy committee may amend rates again before the end of the year.

Interest Rate upside is the primary prop supporting the CAD at present as broader trade concerns and softening oil prices weigh on the commodity driven unit. NAFTA continues to cast a specter of uncertainty over the short and medium-term outlook with key sticking points yet to be resolved and with talks on hold until after US trade officials return from the EU today we can expect little movement outside current ranges.

Attentions remain with trade with a break below support at 0.7560 opening the door to a deeper downward correction.

 

 

 

Posted by OFX

The Dollar Index Pushes Higher on Risk Moves

OFX Daily Market News

Posted by OFX

  United States Dollar

The US Dollar Index (DXY) appreciated 0.33% to start the new working week, opening this morning at 95.34. The catalyst for the move upwards was stronger than expected US wage growth as well as fresh new threats from President Trump on Chinese imports. Market sentiment decidedly shifted towards safe-haven currencies which saw the Greenback strengthen further than it already has this year. The US Non-Farm Payroll report surprised markets adding 201,000 new jobs in August, beating expectations of 191,000. Also, average hourly earnings rose 0.4% month-on-month and by 2.9% year-on-year, which was the highest wage growth print in almost a decade supporting the Fed’s assertion that the tight labor market would lead to higher wages and price inflation. The implications were not lost on the market which saw US treasury yields move sharply higher as well as boosting expectations of the Fed tightening monetary policy further. The Dollar also benefitted from the sentiment, rising higher on the news against most of its counterparts.

New threats from the President also boosted demand for the Greenback despite not announcing the $200bn tariffs on Chinese imports. President Trump did say that it could happen “very soon” but so far, the duties have not yet been implemented. It was another ratchet up of the rhetoric that saw the USD appreciate further with his statement suggesting he was considering putting higher tariffs on all Chinese goods, leading to negative sentiment on market movements. The news hit riskier assets the most and saw steep depreciation for many China aligned currencies.

With little headline data on the domestic docket throughout the week ahead, direction will continue to derive from ongoing trade developments.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3157 – 1.3201

The Canadian Dollar fell throughout trade on Friday touching one-week lows at 0.7569 after employment data fell short of broader expectations. Surprisingly the economy lost more than 50,000 jobs throughout August, the most significant monthly decline since January and well outside analyst expectations for labor market expansion, while an uptick in Full-time employment helped pacify investors and ensures another rate hike is still on the table.

Having fallen almost one percent through the week, the Canadian dollar remains vulnerable to trade talk and risk appetite trends. Verification President Trump and the US will look to impose a further $267 billion tariffs on Chinese Imports only escalates recent uncertainty following the break down in trade talks at the end of last week. There is an increasing fear Trump and the US will look to implement Tariffs on Canadian auto-makers, a move that could have significant consequences for the broader Canadian economy.

With little headline data on the domestic docket throughout the week ahead, the direction will continue to derive from ongoing trade developments. Support for the USDCAD pair is seen at 1.3157 and 1.3114 while resistance is 1.3201 and 1.3245.

 

 

 

  Euro

EUR / USD Expected Range: 1.1526 – 1.1584

EUR/USD moved within a 1.11% range last week from lows of 1.1530 on Wednesday and a high of 1.1659 on Thursday. The pair moved off its perch of 1.1649 on Friday and relinquished all gains made earlier in session following strong US employment data. The US Nonfarm Payroll report surprised markets adding 201,000 new jobs in August, beating expectations of 191,000. Also, average hourly earnings rose 0.4% month-on-month and by 2.9% year-on-year, which was the highest wage growth print in almost a decade.

Regarding local data, German industrial production was weaker than expected, falling by 1.1% in July, after declining 0.7% in June. The annual pace of growth of industrial output eased to an increase of 1.1% in July, down from a rise of 2.7% in June. Eurozone Q2 final GDP came in unchanged as expected at 0.4% but the year-on-year numbers were revised to 2.1% from 2.2%. Looking ahead, the macroeconomic calendar is full and kicks off with the Eurozone’s Sentix Investor Confidence. This survey of 2,800 analysts and investors has surprised to the upside in the past two months, reaching 14.7 points in August. A similar figure is likely for September.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2897 – 1.2954

The Great British Pound extended gains on Friday against the Greenback reaching a high of 1.3027 after European Union negotiator Michel Barnier said the EU was open to discussing other “backstops” on the Brexit issue. Unfortunately, those gains were short-lived after Greenback rallied on the back of strong U.S. jobs data. U.S. job growth accelerated in August and wages notched their most significant annual increase in more than nine years.

Overnight UK Gross Domestic Product (GDP) data released higher at 0.3% from expectations of 0.1%. Last week the IHS/Markit Institute indicated that the British manufacturing industry had slowed down to its lowest expansion rate since July 2016 – July 2016 was just after the Brexit referendum. On Tuesday we will see UK Jobless Rate which is expected to remain at 4.00%.

From a technical perspective, the USD/GBP pair is currently trading at 1.2945. We continue to expect support to hold on moves approaching 1.2890 while now any upward push will likely meet resistance around 1.2950.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7097 – 0.7126

The Australian Dollar continued its freefall lower on Friday after opening the day clawing onto the 72 US cent handle. Whipsawing for the majority of last week between 0.7160 and 0.72, the Australian dollar dropped through support levels during the domestic session on Friday as it continued to trade in a risk-off environment.

With levels now testing Feb ’16 lows, it is possible the US 70 cent mark is now firmly on the horizon for investors as we head into the new week. Direction for the Australian dollar will be determined by the release of Chinese inflation figures this morning as the AUD/USD opens at 0.7118.

Shedding nearly 1.5% for the day from its high on open, the Aussie closed to a new yearly low of US 71 cents following the news that President Donald Trump was looking to hit China with further tariffs on $US267 billion of Chinese goods on top of the already announced tariffs of US $200bn of goods.
Non-Farm Employment Change figures were positive for the United States on Friday evening, only supporting further interest rates hikes by the Federal Reserve and putting potential further pressure on the local currency for the foreseeable future.

With levels now testing Feb ’16 lows, it is possible the US 70 cent mark is now firmly on the horizon for investors as we head into the new week. Direction for the Australian dollar will be determined by the release of Chinese inflation figures this morning as the AUD/USD opens at 0.7118.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6512 – 0.6540

The trade linked Kiwi was sold off on Friday to finish the US session as the second worst G10 performer. Stronger than expected US wage growth in tandem with the news that President Trump was threatening to impose tariffs on all Chinese imports forced the NZD lower. The NZD/USD fell from 0.6585 to 0.6528 – representing the lowest level since February 2016.

Traders were watching Q2 manufacturing activity which was out at 8:45 Sydney time data missed expectations of 1.4% printing a -1.2%. An essential input for GDP forecasts is closely watched as a guide to positioning ahead of the next GDP read on 20th September.

Considering recent moves, NZD/USD technical supports can now be seen at 0.6527 and 0.6500 handles on the downside with any topside moves expected to meet resistance at levels nearer to 0.6545.

 

 

 

Posted by OFX

Australian Dollar continues freefall – Tests 71 US cents

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar continued its freefall lower on Friday after opening the day clawing onto the 72 US cent handle. Whipsawing for the majority of last week between 0.7160 and 0.72, the Australian dollar dropped through support levels during the domestic session on Friday as it continued to trade in a risk off environment.

Shedding nearly 1.5% for the day from its high on open, the Aussie closed to a new yearly low of US 71 cents following the news that President Donald Trump was looking to hit China with further tariffs on $US267 billion of Chinese goods on top of the already announced tariffs of US $200bn of goods.

Non-Farm Employment Change figures were positive for the United States on Friday evening, only supporting further interest rates hikes by the Federal Reserve and putting potential further pressure on the local currency for the foreseeable future.

With levels now testing Feb ’16 lows, it is possible the US 70 cent mark is now firmly on the horizon for investors as we head into the new week.

Direction for the Australian dollar will be determined by the release of Chinese inflation figures this morning as the AUD/USD opens at 0.7110.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0780 – 1.0980

The trade linked Kiwi was sold off on Friday to finish the US session as the second worst G10 performer. Stronger than expected US wage growth in tandem with the news that President Trump was threatening to impose tariffs on all Chinese imports forced the NZD and it’s AUD counterpart lower. The NZD/USD fell from 0.6585 to 0.6528 – representing the lowest level since February 2016. Interestingly the NZD fared better than the AUD with the AUD/NZD cross losing half a cent, settling at levels near 1.0870.

Traders will be looking towards todays Q2 manufacturing activity which is due out at 8:45 Sydney time. An important import for GDP forecasts, the read will be closely watched as a guide to positioning ahead of the next GDP read on 20th September.

In light of recent moves, NZD/USD technical supports can now be seen at 0.6527 and 0.6500 handles on the downside with any topside moves expected to meet resistance at levels nearer to 0.6545.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7830 – 1.8230

The Great British Pound extended gains on Friday against the Greenback reaching a high of 1.3027 after European Union negotiator Michel Barnier said the EU was open to discussing other “backstops” on the Brexit issue. Unfortunately those gains were short-lived after Greenback rallied on the back of strong U.S. jobs data. U.S. job growth accelerated in August and wages notched their biggest annual increase in more than nine years.

Looking ahead today and it all starts with the release of Gross Domestic Product (GDP) data which could highlight a few concerns. Last week the IHS/Markit Institute indicated that the British manufacturing industry had slowed down to its lowest expansion rate since July 2016 – July 2016 was just after the Brexit referendum. On Tuesday we will see UK Jobless Rate which is expected to remain at 4.00%.

From a technical perspective, the USD/GBP pair is currently trading at 1.2917. We continue to expect support to hold on moves approaching 1.2890 while now any upward push will likely meet resistance around 1.2950.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7030 – 0.7280

The US Dollar Index (DXY) appreciated 0.33% to start the new working week, opening this morning at 95.34. The catalyst for the move upwards was stronger than expected US wage growth as well as fresh new threats from President Trump on Chinese imports. Market sentiment decidedly shifted towards safe-haven currencies which saw the Greenback strengthen further than it already has this year.

The main talking point domestically was the surprise reading from the US non-farm payrolls report which noted an increase of 2.9% for average hourly earnings. US wage growth across numerous readings has gradually drifted upwards, supporting the Fed’s assertion that the tight labour market would lead to higher wages and price inflation. The implications were not lost on the market which saw US treasury yields move sharply higher as well as boosting expectations of the Fed tightening monetary policy further. The Dollar also benefitted from the sentiment, rising higher on the news against most of its counterparts.

Demand for the Greenback was also boosted by new threats from the President despite not announcing the $200bn tariffs on Chinese imports. President Trump did say that it could happen “very soon” but so far, the tariffs have not yet been implemented. It was another ratchet up of the rhetoric that saw the USD appreciate further with his statement suggesting he was considering putting higher tariffs on all Chinese goods, leading to a negative sentiment on market movements. The news hit riskier assets the most and saw steep depreciations for a number of China aligned currencies.

To start the new week the Greenback looks to the headlines for direction with a quiet economic calendar to contend with.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6110 – 0.6220

The Euro Dollar moved within a 1.11% range last week from lows of 1.1530 on Wednesday and a high of 1.1659 on Thursday against the Greenback. The pair moved of its perch of 1.1649 on Friday and relinquished all gains made earlier in session after strong US employment data. The US Nonfarm Payroll report surprised markets adding 201,000 new jobs in August, beating expectations of 191,000. Also average hourly earnings rose 0.4% month-on-month and by 2.9% year-on-year which was the highest wage growth in almost a decade.

Data locally, German industrial production was weaker than expected, falling by 1.1% in July, after declining 0.7% in June. The annual pace of growth in industrial production eased to an increase of 1.1% in July, down from a rise of 2.7% in June. Eurozone Q2 final GDP came in unchanged as expected at 0.4% but the year-on-year numbers were revised to 2.1% from 2.2%

Looking ahead the macroeconomic calendar is full and kicks off with the Eurozone’s Sentix Investor Confidence. This survey of 2,800 analysts and investors surprised to the upside in the past two months, reaching 14.7 points in August. A similar figure is likely for September.

On the technical front, we see support levels at 1.1530 followed by 1.1500. On the upside, first line of resistance sits at 1.1590 and then 1.1625

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9330 – 0.9530

The Canadian Dollar fell throughout trade on Friday touching one-week lows at 0.7569 after employment data fell short of broader expectations. Surprisingly the economy lost in excess of 50,000 jobs throughout August, the largest monthly decline since January and well outside analyst expectations for labour market expansion, while an uptick in Full time employment helped pacify investors and ensures another rate hike is still on the table.

Having fallen almost one percent through the week the Canadian dollar remains vulnerable to trade talk and risk appetite trends. Verification President Trump and the US will look to impose a further $267 billion tariffs on Chinese Imports only escalates recent uncertainty following the break down in trade talks at the end of last week. There is an increasing fear Trump and the US will look to implement Tariffs on Canadian auto-makers, a move that could have significant consequences for the broader Canadian economy.

With little headline data on the domestic docket throughout the week ahead direction will continue to derived from ongoing trade developments.

 

 

 

Posted by OFX

RBA keeps rates on hold, trade concerns weigh on the Eurozone

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar enjoyed a week of mixed fortunes, oscillating between lows of 0.7160 and highs of 0.7230.

Kicking things off, the RBA extended its record run of policy inaction, holding rates steady at 1.5% as widely expected. The focus, however, was firmly on the accompanying statement for clues on the direction of the central banks thinking. The statement itself was broadly neutral in tone and notably did not mention Westpac’s decision to lift variable mortgage rates, basically shrugging off market concerns of rising rates. The statement also failed to mention emerging market turmoil and a laundry list of recent market concerns.

To close out the week, the Aussie was buoyed by a positive trade balance reading which saw exports increase their margin over imports. The latest figure was surprisingly higher than expected and saw the Aussie break through 0.72. These gains, however, were quickly unwound after ANZ, and then CBA announced they’d follow Westpac and increase their mortgage rates. The market reacted poorly to the news on the implications of the rise, despite the RBA’s lack of concern for small rate movements.

 

 

 

  New Zealand Dollar

The New Zealand Dollar has managed to recoup early losses from last week where we saw the pair touch a multi-year low of 0.6530 vs the Greenback.

On the data front, last week saw the release of the ANZ Commodity Price Index which reported a drop of 1.1% month on month for August which was its third consecutive monthly decline. The index is down 0.5% year on year and reports show that of the 17 commodities in the ANZ’s index, seven fell, four were unchanged and six lifted. The data had little impact on the Kiwi and despite touching a near 30-month low the Kiwi managed to recoup some losses on the back of a broad-based USD weakness. Elsewhere the GDT Dairy auction was slightly weaker than markets were expecting. GDT price index declined 0.7% following the 3.6% fall witnessed in the previous auction and put some additional selling pressure on the Kiwi.

 

 

 

  British Pound

The started last week poorly, following the negative Brexit headlines over the weekend, namely Barnier’s reaction to the Chequers proposal. The quid was sold off further following the release of a weaker than expected UK Manufacturing PMI print on Monday, which came in at 52.8 vs. 53.9. In fact, it was the weakest print for 25 months.

On the flip side of the coin a better than expected UK Services PMI print gave the pound a bit of a lift, but so too did a mild about-turn in risk sentiment. The biggest market-moving news of the week, at least as far as GBP was concerned, came from a Bloomberg news release that reported Britain and Germany were willing to drop key Brexit demands. Specifically, the report said “the British and German governments have abandoned key Brexit demands, potentially easing the path for the EU and UK to strike a deal”. GBP/USD gapped 100 points higher, back through 1.29 on the news.

What goes up……well, it didn’t last long. Within a couple of hours a German government spokesman said that their position on Brexit had in fact, not changed. The net impact on the pound was still positive however, and GBP/USD finished the week hovering where it started.

 

 

 

  United States Dollar

The US Dollar primarily held onto gains enjoyed from the previous weeks close as a US Labor Day holiday ensured thin volumes through the weeks opening sessions. The worlds base currency-maintained a near one week high against G10 counterparts as trade tensions, highlighted by the break down in NAFTA negotiations, and ongoing emerging market concerns prompted broader US dollar demand.

Investors reacted to comments from President Donald Trump at the weekend wherein he reportedly warned Congress not to meddle with talks to revamp NAFTA as there was no need to keep Canada in the agreement if they failed to cede to US demands. The comments came on the back of a similar criticism issued on Friday and have dampened any expectation a trilateral trade agreement will be reached in the near term. The break down only adds to an escalation in global trade tensions. Emerging market concerns also weigh on investors’ appetite for risk as escalating economic crises in Turkey and Argentina are prompting a flight of capital away from developing economies and back into the USD.

 

 

 

  Euro

A series of PMIs were released from the Eurozone last week. The Eurozone print came in better than market forecasts but the indices for Germany, France and Italy mostly disappointed, and so the euro was fairly steady early on.

Trade concerns weighed further on the 19 nation combined unit as investors feared the Trump administration is in no mood to compromise or negotiate on Trade with the China, Canada or Europe following the breakdown of talks between the US and Canada and a suggestion the US will impose tariffs on German automakers.

The market remains relatively skittish as the risk-off environment continues to dominate market sentiment.

 

 

 

  Canadian Dollar

The Canadian dollar closed last week on a positive note, recouping most of the week’s losses. The catalyst behind the loonie jump was the upbeat message from Senior Deputy Governor of the Bank of Canada Carolyn Wilkins speech in which she describes the Canadian economy as being on “solid footing” and households are “adjusting well” to higher interest rates. All signs and signals are there for the BOC to raise the rate at it next scheduled interest rate announcement and monetary policy report due on October 24, 2018. Wilkins cited the “gradual” approach that the central bank is taking as appropriate as the recent spike in inflation is seen as temporary and not because of over demand. Canada remains out of a trade agreement with NAFTA negotiations still ongoing, and this is also in the economic model the BoC use to calculate if a hike is “prudent at this juncture.”

On the data front, The Bank of Canada held interest rates steady on Wednesday as expected and reiterated that while more hikes would be needed to keep inflation on target. The BOC’s interest rate remains at 1.50 percent. The Canadian Central Bank has raised rates four times since July 2017 in response to the growing economy.

 

 

 

Posted by OFX

Non-Farm Employment Figures Released Today

OFX Daily Market News

Posted by OFX

  United States Dollar

The Dollar pared recent gains, edging lower through trade on Thursday as investors positioned themselves ahead of Friday’s jobs data. Having touched two-week highs on Tuesday, the dollar uptick stalled as investors prepare for a softening or slowdown in payroll performance. Thursdays ADP private payroll report printed below expectations. While typically a foreshadowing indicator of broader labor market performance the softer read could suggest employment, growth is starting to turn following a sustained and long-term upside.

Falling two-tenths of a percent the dollar index correction was amplified by a push toward safe-haven JPY and CHF as trade concerns continue to weigh on the minds of investors. While we expect investors to buy into the dip a softer labor market and wage growth print may prompt a deeper correction into the weekend.

Attentions remain squarely focused on Non-farm payroll data while trade and emerging market concerns dictate broader risk appetite demand. Markets will be keenly attuned to any announcement regarding the imposition of additional US tariffs as the period for public consultation on an additional 200bn in China trade taxes ends today.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3114 – 1.3201

The Canadian dollar gained 0.5% yesterday reversing this week’s losses. The catalyst behind the loonie jump was the upbeat message from Senior Deputy Governor of the Bank of Canada Carolyn Wilkins speech in which she describes the Canadian economy as being on “solid footing” and households are “adjusting well” to higher interest rates. All signs and signals are there for the BOC to raise the rate at it next scheduled interest rate announcement and monetary policy report due on October 24, 2018. Wilkins cited the “gradual” approach that the central bank is taking as appropriate as the recent spike in inflation is seen as temporary and not because of over demand. Canada remains out of a trade agreement with NAFTA negotiations still ongoing, and this is also in the economic model the BoC use to calculate if a hike is “prudent at this juncture.”

Statistics Canada released the late Canadian job numbers this morning last month 54K on full employment for July expectations for August is mediocre 5k, and the Canadian unemployment rate is expected to rise to 5.9% from 5.8% as employment slips. Later this morning we have Ivey PMI for August posted at 10 am previous was at 61.8. Support remains at 1.3114 while resistance is at 1.3201.

 

 

 

  Euro

EUR / USD Expected Range: 1.1601 – 1.1649

The euro traded within a tight range for most of Thursday with little to excite investors on the domestic calendar.

The market remains relatively skittish this week as the risk-off environment continues to dominate market sentiment. Looming over market movements is the on-going US-China trade war which will potentially escalate further today leaving the euro in a holding pattern ahead of this news. Supporting the euro within this context was a poor US non-farm employment reading with 163,000 jobs added against the expected 190,000, which saw the USD depreciate marginally against many currencies, including the single currency.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2913 – 1.3026

The Great British Pound extended gains on Thursday on the back of a weak US dollar but remained well below highs hit in the previous session due to uncertainty over the progress of the Brexit negotiations. The GBP/USD pair reached a 24-hour high of 1.3026. News overnight that German Chancellor Angela Merkel’s government is preparing for all Brexit scenarios, including a no-deal, weighed on sentiment on Thursday.

There are no macroeconomic events scheduled in the UK for this Friday.

From a technical perspective, the USD/GBP pair is currently trading at 1.2997. We continue to expect support to hold on moves approaching 1.2945 while now any upward push higher will likely meet resistance around 1.3029.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7137 – 0.7197

The Australia Dollar traded within its weekly range on Thursday, moving within 0.7162 and 0.7210 as the domestic news came in thick and fast. Opening this morning at the lower end of the range at 0.7159.

The Aussie was initially buoyed by a positive trade balance reading which saw exports increase their margin over imports. The latest figure was surprisingly higher than expected and saw the Aussie break through 0.72. These gains, however, were quickly unwound after ANZ, and then CBA announced they’d follow Westpac and increase their mortgage rates. The market reacted poorly to the news and plummeted to 0.7165 on the implications of the rise, despite the RBA’s lack of concern for small rate movements.

Moving into Friday, the Aussie now turns to the Headlines to hear from President Trump on trade. Markets will also keep a close eye on US employment figures for direction.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6560 – 0.6589

The New Zealand Dollar has managed to recoup early losses from the week where we saw the pair touch a multi-year low of 0.6530 vs the Greenback. During Asian trade on Thursday, the Kiwi momentarily pushed through the psychological resistance level of 66c touching 0.6616 before a pullback down to 0.6575 during the early European session. With little in the way of local data the Kiwi has moved within quite a tight range of 60 pips and at the time of writing the pair is sitting at 0.6590.

The Reserve Bank of New Zealand Governor Adrian Orr delivered a speech titled “Geopolitics, New Zealand and the Winds of Change” at a national conference co-hosted by the Financial Services Council and Workplace Savings NZ, in Auckland.

On the technical front, the NZD/USD sees immediate resistance up at 0.6615 followed by 0.6660, with support sitting at 0.6570 and 0.6530.

 

 

 

Posted by OFX

Aussie well supported despite mortgage rate increases by ANZ and CBA

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australia Dollar traded within its weekly range on Thursday, moving within 0.7162 and 0.7210 as the domestic news came in thick and fast. Opening this morning at 0.7196, the Aussie starts Friday relatively unchanged from yesterday’s market open, despite some movement throughout the day.

The Aussie was initially buoyed by a positive trade balance reading which saw exports increase their margin over imports. The latest figure was surprisingly higher than expected and saw the Aussie break through 0.72. These gains however were quickly unwound after ANZ, and then CBA announced they’d follow Westpac and increase their mortgage rates. The market reacted poorly to the news and plummeted to 0.7165 on the implications of the rise, despite the RBA’s lack of concern for small rate movements.

In an almost carbon copy of the previous day, off-shore forces then forced the Aussie higher to again flirt with 0.72. Well supported by a less than stellar non-farm employment reading in the US, the Aussie founds it feet in an otherwise risk-off environment as President Trump looks to impose $200bn worth of Tariffs on China. The public consultation period comes to a close shortly with the market widely expecting the additional tariffs to be announced.

Moving into Friday, the Aussie now turns to the Headlines to hear from President Trump on trade. Markets will also keep a close eye on US employment figures for direction.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0820 – 1.0980

The New Zealand Dollar has managed to recoup early losses from the week where we saw the pair touch a multi-year low of 0.6530 vs the Greenback. During Asian trade on Thursday the Kiwi momentarily pushed through the psychological resistance level of 66c touching 0.6616 before a pull back down to 0.6575 during the early European session. With little in the way of local data the Kiwi has moved within quite a tight range of 60 pips and at the time of writing the pair is sitting at 0.6590.

On the crosses, NZD/AUD buys 0.9149 and the NZD/EUR is weaker again at 0.5668

Looking ahead the Reserve Bank of New Zealand Governor Adrian Orr will be delivering a speech titled “Geopolitics, New Zealand and the Winds of Change” at a national conference co-hosted by the Financial Services Council and Workplace Savings NZ, in Auckland.

On the technical front, the NZD/USD sees immediate resistance up at 0.6615 followed by 0.6660, with support sitting at 0.6570 and 0.6530.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7830 – 1.8050

The Great British Pound extended gains on Thursday on the back of a weak US dollar but remained well below highs hit in the previous session due to uncertainty over the progress of the Brexit negotiations. The GBP/USD pair reached a 24-hour high of 1.2961. News overnight that German Chancellor Angela Merkel’s government is preparing for all Brexit scenarios, including a no-deal, weighed on sentiment on Thursday.

Looking ahead today and there are no macroeconomic events scheduled in the UK for this Friday.

From a technical perspective, the USD/GBP pair is currently trading at 1.3180. We continue to expect support to hold on moves approaching 1.2890 while now any upward push will likely meet resistance around 1.2930.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7130 – 0.7280

The Dollar pared recent gains, edging lower through trade on Thursday as investors positioned them selves ahead of Fridays labour market data. Having touched two-week highs on Tuesday the dollar uptick stalled as investors prepare for a softening or slowdown in payroll performance. Thursdays ADP private payroll report printed below expectations. While typically a poor leading indicator of broader labour market performance the softer read could suggest employment growth is starting to turn following a sustained and long-term upside.

Falling 2 tenths of a percent the dollar index correction was amplified by a push toward safe haven JPY and CHF as trade concerns continue to weigh on the minds of investors. While we expect investors to buy into the dip a softer labour market and wage growth print may prompt a deeper correction into the weekend.

Attentions remain squarely focused on Non-farm payroll data while trade and emerging market concerns dictate broader risk appetite demand. Markets will be keenly attuned to any announcement regarding the imposition of additional US tariffs as the period for public consultation on an additional 200bn in China trade taxes ends today.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6150 – 0.6250

The Euro traded within a tight range for most of Thursday with little to excite investors on the domestic calendar. Opening this morning at 0.1623, the Euro remains relatively unchanged ahead of President Trumps widely expected announcement of $200bn tariff on China.

The market remains relatively skittish this week as the risk-off environment continues to dominate market sentiment. Looming over market movements is the on-going US-China trade war which will potentially escalate further today leaving the Euro in a holding pattern ahead of this news. Supporting the Euro within this context was a poor US non-farm employment reading with 163,000 jobs added against the expected 190,000 which saw the USD depreciate marginally against a number of currencies, including the Euro.

With little on the agenda domestically to drive direction today, attentions remain fixed on the headlines with the focus squarely on any announcements from the USA.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9410 – 0.9530

The USD/CAD pair gained touched its highest level since July 20 at 1.3225 overnight on the back of a sharp fall seen in crude oil prices weighed on the commodity-sensitive loonie.

On the data front yesterday we saw the release of Building Permits for the month of July which came in down 0.1% in June. The value of permits for residential buildings edged down 0.3% to $5.3 billion in July. The decline was mainly the result of lower construction intentions for multi-family dwellings, down 1.1% to $2.9 billion. Looking ahead today and all eyes will be on the Unemployment Rate decision which we are expected to see a rise from 5.8% to 5.9%.

From a technical perspective, the USD/CAD pair is currently trading at 1.3150. We continue to expect support to hold on moves approaching 1.3200 while now any upward push will likely meet resistance around 1.3290.

 

 

 

Posted by OFX

Employment Week Non-Farm Employment Figures Out Friday / ADP Today

OFX Daily Market News

Posted by OFX

  United States Dollar

Much of this week has been about the prospect of the US implementing new tariffs on $200 billion worth of Chinese imports by the end of the week. Yesterday we saw the release of U.S. Trade Balance data, and despite the imposition of tariffs in July, the US trade deficit increased to $50.1 billion, a 9.6% increase from the previous month. The U.S. trade deficit widened to a five-month high in July as exports of soybeans, and civilian aircraft declined, and imports hit a record high. This suggesting that trade could be a drag on economic growth in the third quarter.

The macroeconomic focus was on ADP employment change for August which missed consensus of 195K and print. Weekly continuing jobless and initial jobless claims both post better than previous at 1.707M and 203k respectively. Later today we have Markit PMI, ISM Manufacturing, as well as Factory Orders. This data will be followed up with crude oil inventories release at 11 am today. Market Participants will then focus their attention US employment numbers tomorrow with Non-Farm Payroll expected to print at 191K and the unemployment rate to drop to 3.8% from the current 3.9%.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3157-1.3200

The Bank of Canada held interest rates steady on Wednesday as expected and reiterated that while more hikes would be needed to keep inflation on target. The BOC’s overnight interest rate remains at 1.50 percent. The Canadian Central Bank has raised rates four times since July 2017 in response to the growing economy. CPI inflation moved up to 3 percent in July and yet the BOC kept interest rates unchanged. Senior Deputy Governor Carolyn Wilkins speaks today at 2:30 EST and may shed some valued light on the current BOC view on the Canadian economy.

Looking ahead today and the macroeconomic calendar is relatively light with the only release Building Permits for August with a forecast for a lift of 1.1% from the previous month yet print at -0.1%. On Friday all eyes will be on Canadian employment number forecasted at 54k, while the unemployment rate is expected to rise from 5.8% to 5.9%.

 

 

 

  Euro

EUR / USD Expected Range: 1.1614-1.1659

The Euro has been trading in a tight range for much of the week as trade uncertainty dominated the headlines. Concerns with Brexit, the US and EU trade dispute and the US and China trade war all weighed on the market with volumes and trading activity proving thin. The momentum has shifted slightly, however, with the Euro appreciated significantly during the Wednesday session. Opening this morning at 1.1631 against its US counterpart, the Euro shrugged off much of the concerns on the back of positive headlines.

Domestically the day was dominated by the headlines with reports that Germany is ready to accept a less detailed agreement on the UK’s future economic and trade ties in a bid to get a divorce deal done. Germany later refuted the report, outlining that their position remains unchanged however the market did rally 0.3%. Economic news was also a bit of a mixed bag with PMI suffering downward revisions and retail sales even falling.

Against this backdrop, the Fibre (EUR/USD) found further support from the recovery in emerging markets. Risk-sentiment globally shifted positively to riskier assets and currencies with the Euro also finding help from the rising tide. While marginal at best, the Euro does find itself well supporting going into Thursday. Traders will also be keeping a close eye on the headlines.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2897-1.2951

The Great British Pound has had quite the rollercoaster ride against the Greenback on the Wednesday having moved from lows of 1.2785 to highs of 1.2982 all in the space of 1-hour making it its most significant jump of 2018. The main catalyst for the move was from Bloomberg reports of the UK and Germany willing to drop critical Brexit demands. The report said, “the British and German governments have abandoned key Brexit demands, potentially easing the path for the EU and UK to strike a deal.” The significant shift in positions could make an agreement easier to achieve which was well received by the Sterling.

It’s a broken record, but any Brexit related news will likely dominate today’s session. There’s no UK data due out today, and so as far as economic data goes, the focus will turn to US employment numbers due for release tomorrow morning at 8:30 am EST.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7166-0.7211

The Australian Dollar finds itself in familiar territory this morning, flirting with the 0.72 level. Opening this morning at 0.7192, the Aussie was well supported for much of the Asian session with Q2 GDP surprising the market. Ultimately, however, the almost vertical incline at the time of the announcement was whittled away to be a footnote in the broader narrative.

Second quarter GDP dominated proceedings for much of the domestic session with a posting of 0.9% against the expected 0.7% expansion, ultimately recording a 3.4% increase for the year to June. The Aussie climbed almost immediately by approximately 40 points to test 0.7210 but couldn’t breach the level. The market took the news with a grain of salt and quickly unwound the Aussies gains, flatlining to as low as 0.7148 at the European open.

Globally, emerging markets were the big winners of the day with a rising wave of positive risk-sentiment forcing the USD lower across several emerging market and commodity currencies. The Aussie also benefitted from this, although it was limited, with a slow, gradual rise to where we open this morning at 0.7197.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6572-0.6616

Having spent most, it’s time under the 0.6550 level during the local time on Wednesday. The New Zealand Dollar opened the Asian session higher at 0.6590, and it is flat to start the North American session trading at 0.6595. Yesterday we saw the release of the ANZ Commodity Price Index which reported a drop of 1.1% month on month for August which was its third consecutive monthly decline. The index is down 0.5% year on year and reports show that of the 17 commodities in the ANZ’s index, seven fell, four were unchanged and six lifted. The data had little impact on the Kiwi, and despite touching a near 30-month low, the Kiwi has managed to recoup some losses on the back of a broad-based USD weakness.

Looking ahead, the local docket is light and therefore the Kiwi will likely take its direction from offshore markets, tonight sees US ADP Non-Farm Employment Change, always a key piece of data that looks at employment growth.

On the technical front, we see support sitting at 0.6530 and 0.6500 with resistance up at 0.6600 followed by 0.6660.

 

 

 

Posted by OFX

Aussie fails to hold above 0.72 despite better than expected GDP expansion

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar finds itself in familiar territory this morning, flirting with the 0.72 level. Opening this morning at 0.7192, the Aussie was well supported for much of the trading day with Q2 GDP surprising the market. Ultimately however, the almost vertical incline at the time of the announcement was whittled away to be a footnote in the broader narrative.

Second quarter GDP dominated proceedings for much of the domestic session with a posting of 0.9% against the expected 0.7% expansion, ultimately recording a 3.4% increase for the year to June. The Aussie climbed almost immediately by approximately 40 points to test 0.7210 but couldn’t breach the level. In the end however, the market took the news with a grain of salt and quickly unwound the Aussies gains, flatlining to as low as 0.7148 at the European open.

Globally, emerging markets were the big winners of the day with a rising wave of positive risk-sentiment forcing the USD lower across a number of emerging market and commodity currencies. The Aussie also benefitted from this, although it was limited, with a slow, gradual rise to where we open this morning at 0.7192.

Moving forward into Thursday, the Aussie turns to its Trade Balance figures for some insight as well as keeps a close eye on US PMI and Non-Farm Employment changes.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0820 – 1.1010

Having spent most it’s time under the 0.6550 level during local time on Wednesday, the New Zealand Dollar opens this morning higher at 0.6590. Yesterday we saw the release of the ANZ Commodity Price Index which reported a drop of 1.1% month on month for August which was its third consecutive monthly decline. The index is down 0.5% year on year and reports show that of the 17 commodities in the ANZ’s index, seven fell, four were unchanged and six lifted. The data had little impact on the Kiwi and despite touching a near 30-month low the Kiwi has managed to recoup some losses on the back of a broad-based USD weakness.

Looking ahead, the local docket is light and therefore the Kiwi will likely takes its direction from offshore markets, tonight sees US ADP Non-Farm Employment Change, always a key piece of data that takes a look at employment growth.

On the technical front, we see support sitting at 0.6530 and 0.6500 with resistance up at 0.6600 followed by 0.6660.
The Great British Pound has had quite the rollercoaster ride against the Greenback on the Wednesday having moved from lows of 1.2785 to highs of 1.2982 all in the space of 1-hour making it its biggest jump of 2018. The main catalyst for the move was from Bloomberg reports of the UK and Germany willing to drop key Brexit demands, the report said “the British and German governments have abandoned key Brexit demands, potentially easing the path for the EU and UK to strike a deal”. The significant shift in positions could make an agreement easier to achieve which was well received by the Sterling.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7800 – 1.8100

The Great British Pound has had quite the rollercoaster ride against the Greenback on the Wednesday having moved from lows of 1.2785 to highs of 1.2982 all in the space of 1-hour making it its biggest jump of 2018. The main catalyst for the move was from Bloomberg reports of the UK and Germany willing to drop key Brexit demands, the report said “the British and German governments have abandoned key Brexit demands, potentially easing the path for the EU and UK to strike a deal”. The significant shift in positions could make an agreement easier to achieve which was well received by the Sterling.

Looking ahead, the local calendar is light and therefore investors will look for further clues on Brexit negotiations and offshore for direction.

On the technical front, for the GBP/USD pair we see initial support around 1.2940 followed by 1.2835. Resistance can be seen up at 1.2910 followed by 1.3000.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7130 – 0.7220

Much of this week has been about the prospect of the US implementing new tariffs on $200 billion worth of Chinese imports by the end of the week. Yesterday we saw the release of U.S. Trade Balance data and despite the imposition of tariffs in July, the US trade deficit increased to $50.1 billion, a 9.6% increase from the previous month. The U.S. trade deficit increased to a five-month high in July as exports of soybeans and civilian aircraft declined and imports hit a record high, suggesting that trade could be a drag on economic growth in the third quarter.

Looking ahead today and the macroeconomic focus will be on US employment figures, the country will release the ADP employment Change for August, and Revised Unit Labor Costs for the quarter.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6150 – 0.6240

The Euro has been locked in a tight trading range for much of the week as trade uncertainty dominated the headlines. Concerns with Brexit, the US and EU trade dispute and the US and China trade war all weighed on the market with volumes and trading activity proving thin. The momentum has shifted slightly however, with the Euro appreciated significantly during the Wednesday session. Opening this morning at 1.1631 against its US counterpart, the Euro shrugged off much of the concerns on the back of positive headlines.

Domestically the day was dominated by the headlines with reports that Germany is ready to accept a less detailed agreement on the UK’s future economic and trade ties in a bid to get a divorce deal done. Germany later refuted the report, outlining that their position remains unchanged however the market did rally 0.3%. Economic news was also a bit of a mixed bag with PMI suffering downward revisions and retail sales also falling.

Against this backdrop, the Fibre found further support from the recovery in emerging markets. Risk-sentiment globally shifted positively to riskier assets and currencies with the Euro also finding support from the rising tide. While marginal at best, the Euro does find itself well supporting going into Thursday.

Moving into Thursday, the Euro looks to US non-farm employment and US PMI for direction. Traders will also be keeping a close eye on the headlines.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9400 – 0.9510

The Bank of Canada held interest rates steady on Wednesday as expected and reiterated that while more hikes would be needed to keep inflation on target. The overnight interest rate remains at 1.50 percent. The Bank of Canada has raised rates four times since July 2017 in response to a recovering economy. CPI inflation moved up to 3 per cent in July. This was higher than expected, in large part because of a jump in the airfare component of the consumer price index.

Looking ahead today and the macroeconomic calendar is fairly light with the only release Building Permits for the month of August with forecast of a lift of 1.1% from the previous month. On Friday all eyes will be on the Unemployment Rate decision which is expected to rise from 5.8% to 5.9%.

 

 

 

Posted by OFX

NAFTA Trade Talks Resume in Washington

OFX Daily Market News

Posted by OFX

  United States Dollar

The US dollar has been on a tear since the start of the month and the last 24 hours has been no exception. The currency got a further boost from the release of much better than expected ISM Manufacturing PMI, showing the index rose to 61.3 vs. a 57.6 estimate, the highest reading since 2004. It bodes well for US employment data, due for release on Thursday and Friday, or moreover the much-anticipated Non-Farm Payrolls on Friday.

Meanwhile, the NAFTA story simmers away in the background, and we’re bound to hear more on this as the week moves on. As bilateral talks between the US and Canada showed signs of breaking down completely, there is a real concern the Trump administration will follow through and levy more tariffs on China and renege on any compromises expected by Europe or Canada. NAFTA negotiations resume today in Washington and market participants can only hope a resolution is coming.

The escalation in trade hostilities only dampens demand for risk, amplifying the attractiveness of the USD as a haven asset. Couple this with heightened concerns regarding the stability across key emerging markets and a subsequent flight of capital and ongoing macroeconomic strength fueling support for tighter monetary policy and it is hard to look past the USD as both a short and medium asset play.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3114 – 1.3201

The Canadian dollar yesterday weakened to a six-week low against its U.S. counterpart amid an uncertain outlook for Canada’s trading arrangement with the United States. There has been a little support for the loonie as NAFTA negotiations resume today in Washington.

On the data front today, we have Trade Balance Figures, exports last month were well above expectations, and the print was -0.63billion. Market Participants are not looking for Canada to move into surplus territory as expectations are for a -1.20B print. All eyes will be on the Bank of Canada’s monetary policy announcement at 10 am this morning. While the Bank of Canada is expected to hold on interest rates, the bank may hold off this month due to the ongoing uncertainty of trade negotiations. The Bank of Canada raised rates at their last meeting in July; interest rates currently sit at 1.5%.

From a technical perspective, the USD/CAD pair is currently trading at 1.3175. We see first support at 1.3157 and second support is seen at 1.3114; any upward push will likely meet resistance around 1.3201 and 1.3245.

 

 

 

  Euro

EUR / USD Expected Range: 1.1545-1.1608

The Euro edged lower through trade on Tuesday caught up in the broader emerging market sell-off and push toward the safe-haven US dollar. Slipping back below 1.16 the Euro touched intraday lows at 1.1531 before finding support and closing marginally higher.

Trade concerns weighed further on the 19-nation combined unit as investors fear the Trump administration is in no mood to compromise or negotiate on Trade with the China, Canada or Europe following the breakdown of talks between the US and Canada and a suggestion the US will impose tariffs on German automakers.

A raft of services data for from Europe overnight did very little to support the euro, in the face of broader risk and geopolitical flows.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2785 – 1.2869

The USD dollar strengthened across the board yesterday and as such GBP/USD continued to trade on the back foot. A miss in UK Construction PMI didn’t do the pound too many favors early on with the index printing at 52.9 vs. forecasts for 54.9, this coming hot off the heels of the Manufacturing PMI miss yesterday.

Later on in the day, the pound did get a lift from a news report that stated the EU could offer new guarantees to the UK for a solution to avoid an Irish border post Brexit. Danuta Hubner, who chairs the European Parliament’s constitutional affairs committee said: “we are open to introducing some changes to the backstop solution so that it is politically acceptable for the UK.” Cable pushed higher by 30-40 points as a result. In other GBP related news Mark Carney said yesterday that he was willing to stay on as Bank of England governor, should it help “promote a smooth Brexit and an effective transition at the Bank.” The announcement also provided a bit of support to the pound, but it’s fallen back against the USD again this morning, this as the greenback catches another bid in the early European session.

Today on the data front we had UK Markit Services PMI print better than the expected 53.5 and posted a 54.3. The print did very little to support the pound.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7144 – 0.7217

The Australian Dollar enjoyed a day of mixed fortunes, oscillating between lows of 0.7160 and highs of 0.7230. The event of the day was, of course, the RBA announcement which as predicted, kept rates on hold. The statement was decidedly neutral in tone, and the lack of any further dovish sentiment sent the Aussie higher against the Greenback. The positive movement for the Aussie quickly shifted however as market sentiment reversed globally. Changing hands this morning at 0.7179, the Aussie again succumbs to off-shore forces abroad.

Kicking things off at home, the RBA extended its record run of policy inaction, holding rates steady at 1.5% as widely expected. The focus, however, was firmly on the accompanying statement for clues on the direction of the central banks thinking. The statement itself was broadly neutral in tone and notably did not mention Westpac’s decision to lift variable mortgage rates, basically shrugging off market concerns of rising rates. The statement also failed to mention emerging market turmoil and a laundry list of recent market concerns. The news sent the Aussie marginally higher although this quickly unwound as the day progressed.

The catalyst for the move downwards seems to have no crucial trigger with merely broad USD strength, and portfolio flows driving the market. The USD was heavily bought across the day as market participants in the US came back to work which saw the Greenback rise against most currencies, including the Aussie. Adding fuel to the fire, however, is the skittish demand for commodity currencies and emerging markets as Trump moves ahead with his additional $200bn tariff on China. Moving into Wednesday, the Aussie turns towards its Q/Q GDP figures for direction on the domestic front. Again, a key focus will be on off-shore headlines as well.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6530 – 0.6567

The New Zealand Dollar opens the North American session a shade below 66c against the U.S Dollar. Unable to hold on to the 0.66 handle the Kiwi came under selling pressure as the European markets opened for their day of trade. The NZD/USD pair was sold off and touched a 2 ½ year low of 0.6540 on the back of what appears to be USD strength across the board. There was no real trigger for the move. Reading reports this morning it seems that U.S and Chinese trade relations are keeping investors on edge.

Meanwhile, overnight the GDT Dairy auction was slightly weaker than markets were expecting. GDT price index declined 0.7% following the 3.6% fall witnessed in the previous auction and put some additional selling pressure on the Kiwi.

Looking ahead we have ANZ Commodity Prices due out later this morning, and further risks to the downside for the pair could be expected.

 

 

 

Posted by OFX

Aussie falls due to strengthening Greenback despite neutral RBA

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar enjoyed a day of mixed fortunes, oscillating between lows of 0.7160 and highs of 0.7230. The event of the day was of course the RBA announcement which as predicated, kept rates on hold. The statement was decidedly neutral in tone and the lack of any further dovish sentiment sent the Aussie higher against the Greenback. The positive movement for the Aussie quickly shifted however as market sentiment reversed globally. Changing hands this morning at 0.7179, the Aussie again succumbs to off-shore forces abroad.

Kicking things off at home, the RBA extended its record run of policy inaction, holding rates steady at 1.5% as widely expected. The focus however was firmly on the accompanying statement for clues on the direction of the central banks thinking. The statement itself was broadly neutral in tone and notably did not mention Westpac’s decision to lift variable mortgage rates, basically shrugging off market concerns of rising rates. The statement also failed to mention emerging market turmoil and a laundry list of recent market concerns. The news sent the Aussie marginally higher although this quickly unwound as the day progressed.

The catalyst for the move downwards seems to have no key trigger with simply broad USD strength and portfolio flows driving the market. The USD was heavily bought across the day as market participants in the US came back to work which saw the Greenback rise against most currencies, including the Aussie. Adding fuel to the fire however, is the skittish demand for commodity currencies and emerging markets as Trump moves ahead with his additional $200bn tariff on China.

Moving into Wednesday, the Aussie turns towards its Q/Q GDP figures for direction on the domestic front. Again, a key focus will be on off-shore headlines as well.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0820 – 1.1020

The New Zealand Dollar opened Tuesday’s session a shade above 66c against the U.S Dollar however unable to hold on to the 0.66 handle the Kiwi came under selling pressure as the European markets opened for their day of trade. The NZD/USD pair was sold off and touched a 2 ½ year low of 0.6540 on the back of what appears to be USD strength across the board, there was no real trigger for the move. Reading reports this morning is seems that U.S and Chinese trade relations are keeping investors on edge.

Meanwhile, overnight the GDT Dairy auction was slightly weaker than markets were expecting. GDT price index declined 0.7% following the 3.6% fall witnessed in the previous auction and put some additional selling pressure on the Kiwi.

Looking ahead we have ANZ Commodity Prices due out later this morning and further risks to the downside for the pair could be expected.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7730 – 1.8050

The Great British Pound was a lone rider Tuesday edging upward against the US dollar despite broad based and wide spread greenback gains. Sterling recouped recent losses following reports Bank of England Governor Mark Carney will extend his tenure beyond his current planned leaving date, renewing confidence in the BoE, proffering stability in a time of ongoing uncertainty.

Bouncing back through 1.2850 gains were capped by escalating concerns Theresa May will not be able to garner the parliamentary support at home for her plans to manage the divorce. While negotiators continue to work through key sticking points, namely an Irish border solution, there is a real fear that despite best efforts the October deadline will be missed and the UK will be forced to disband without a favourable plan in place.

Attentions now turn services data for any sign the UK economy is gathering pace, while Brexit developments steer broader direction.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7130 – 0.7350

The US dollar advanced against almost all major counterparts through trade on Tuesday as emerging market concerns and ongoing trade uncertainty weighed on markets appetite for risk. In what is becoming a familiar narrative the USD dollar found support in reports the conflict between the US and China could escalate further. As bilateral talks between the US and Canada break down there is a real concern the Trump administration will follow through and levy more tariffs on China and reneg on any compromises expected by Europe or Canada.

The escalation in trade hostilities only dampens demand for risk, amplifying the attractiveness of the USD as a haven asset. Couple this with heightened concerns regarding the stability across key emerging markets and a subsequent flight of capital and ongoing macroeconomic strength fueling support for tighter monetary policy and it is hard to look past the USD as both a short and medium asset play.

Attentions turn now to Services data ahead of Friday’s Non-Farm Payroll and Wage growth prints. A print in line with Tuesdays 14 year manufacturing activity high will likely add more fuel to the recent bull run, fostering further gains.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6150 – 0.6250

The Euro edged lower through trade on Tuesday caught up in the broader emerging market sell off and push toward the safe-haven US dollar. Slipping back below 1.16 the Euro touched intraday lows at 1.1531 before finding support and closing marginally higher.

Trade concerns weighed further on the 19 nation combined unit as investors fear the Trump administration is in no mood to compromise or negotiate on Trade with the China, Canada or Europe following the breakdown of talks between the US and Canada and a suggestion the US will impose tariffs on German automakers.

Attentions now turn to a raft of services data for macroeconomic guidance in the face of broader risk and geo-political flows.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9410 – 0.9530

Overnight the Canadian dollar weakened to a six-week low against its U.S. counterpart amid an uncertain outlook for Canada’s trading arrangement with the United States. The USD/CAD pair hit a 24-hour low of 1.3089 before later recovering. The greenback extended its gains against all of the major thanks in part to stronger than expected manufacturing activity.

On the data front today all eyes will be on the Bank of Canada’s monetary policy announcement. While the Bank of Canada is expected to hold on interest rates, the bank may hold off this month due to the ongoing uncertainty of trade negotiations. The Bank of Canada raised rates at their last meeting in July.

From a technical perspective, the USD/CAD pair is currently trading at 1.3180. We continue to expect support to hold on moves approaching 1.3172 while now any upward push will likely meet resistance around 1.3200.

 

 

 

Posted by OFX