The Australian dollar flat ahead of RBA Monetary Policy Meeting Minutes.

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian dollar yesterday traded in a tight range between 0.7168 and 0.7186. Although the Aussie dollar was flat the broader theme for the session was US dollar weakness. US equity markets fell on Monday the Dow Jones Industrial Average was down 400 points (1.68%), and on track to close at its lowest level since the beginning of April. The S&P 500 and the Nasdaq were both lower by about 1.7%.

On the release front today in Australia we will see at 11.30am AEDT Housing Industry Association (HIA) home sales for November. As well as Reserve Bank of Australia (RBA) Monetary Policy Meeting Minutes.

From a technical perspective, the AUD/USD pair is currently trading at 0.7175. We continue to expect support to hold on moves approaching 0.7150 while now any upward push will likely meet resistance around 0.7210.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0500 – 1.0600

The New Zealand Dollar held steady to start the week after once again testing three-week lows overnight. Opening just under the 68 US cent handle, the kiwi drifted to an intraday low of 0.6785 following a risk-off tone as movements were seen back into the Greenback ahead of Thursdays Federal Reserve policy meeting.

While markets are pricing in the likelihood of a fourth interest rate rise by the Central Bank in the United States, the NZD/USD managed to claw back the small dip in trading through local trade to finish higher above the US 68 cent handle.

Of interest this morning is the release of ANZ Business confidence survey as the New Zealand Dollar opens this morning at 0.6805.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7500 – 1.7720

The GBP took a breather during yesterday’s trading session after a volatile last week. The Pound rose to break through the resistance ceiling of 1.26, and open at 1.2618 against the USD this morning. The volatile week was in response to events surrounding Brexit, with PM Theresa May surviving the confidence vote. For now, the Pound looks to have steadied itself against other major currencies with a lack of fresh data regarding Brexit.

Tomorrow the UK Office for National statistics will release their data on CPI and PPI. These indices are considered the UK’s most important inflation data because it’s used as the central bank’s inflation target. Expected to have a high-medium impact, a figure above the forecasts of 2.3% and -2.8% respectively, will be good for the currency.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7120 – 0.7200

The US dollar paired gains enjoyed into the end of last weeks close, edging back from 18/19month highs ahead of tomorrow’s Federal Reserve policy meeting. While the FOMC is expected to raise interest rates for a fourth time this calendar year markets are looking to a shift in commentary and forward guidance as a primary driver of short term direction. There has been a rapid repositioning over the last 6 weeks as speculative bets lowering the number of 2019 interest rate hikes has cut long dollar plays allowing the Euro to bounce of recent lows and push back through 1.1350.

Markets appear increasingly convinced the FOMC is preparing for a pause in the recent cycle of tighter monetary policy and have corrected expectations accordingly. Global financial market instability and the ongoing US/China trade dispute are beginning to weigh on US growth outlooks. Falling almost half a percent the dollar fell through 113 JPY while testing 0.99 against the CHF.

Attentions now turn to commentary from President Xi Jinping as he addresses attendees at the Central Economic Work Conference. Any insight into trade policy may help alleviate broader market concerns and bolster risk appetite leading into the festive season.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6300 – 0.6360

The Euro appreciated 0.3% in overnight trading, touching 1.1350 before settling slightly lower at 1.1345 this morning. This is, despite another broader risk-off tone witnessed in global equity markets and a poor PMI result last week.

While the broader outlook continues to weaken, the EU was boosted by news that the populist coalition Italian government has settled on a 2.04% fiscal deficit target for 2019. The Deputy Prime Minister Salvini announced, “We’ve reached agreement on everything”.

While the European Commission is yet to ratify the proposal, the watered-down deficit target certainly reduces the risk of financial penalties for Italy. Italy has had a dampening effect on the Euro for some time now and the agreement shored up Euro support amid a weakening global outlook.

Moving into Tuesday the Euro is set to enjoy another quiet day on the economic calendar. Investors will look to the headlines for direction.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9600 – 0.9700

The Canadian Dollar continued its decline overnight as it finished 0.2% lower against the US Dollar. Declining oil prices again by 2.4% for US crude overnight and a 14 month low did no favours for the Loonie as the USD/CAD rallied through the 1.3400 handle after opening the week at 1.3382.
Foreign Securities purchases for the past month totaled $4.0 billion in October, down from $7.8 billion in September, and showing a net outflow of funds for the Canadian economy as reported.

With the Canadian Dollar continuing the struggle, market participants will be hoping for positive sentiment from the release of manufacturing sales this evening as the USD/CAD opens this morning at 1.3407.

 

 

 

Posted by OFX

US-China Trade concerns

OFX Daily Market News

Posted by OFX

  United States Dollar

The U.S. and China started the latest round of trade talks involving Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer, and Chinese Vice Premier Liu He. The three senior officials discussed Chinese purchases of agricultural products and changes to critical Chinese economic policies.

On the release side, the producer price index ex-food and energy month to month (November) came in at 0.3 percent, while the expected number was 0.1. The PPI year to year came in at 2.7 percent when the read was at 2.5 percent.

 

 

 

  Canadian Dollar

The US dollar index fall is helping the Lonnie as well, given that the CPI numbers in the US came in at the same level as expected. Market participants are waiting for Canadian consumer price index numbers to be released this week to have a better view of where the USD/CAD is heading next.

 

 

 

  Euro

Eurozone investor confidence dropped negative for the first time seen December 2014 in a move that doesn’t come to as surprise to many given the uncertainty across Europe and where we currently sit in the economic cycle. Divisions within Italy are also beginning to emerge between Conte, Tria, Salvini and Di Maio as the first two look to persuade the others that the budget deficit target should be lowered. Elsewhere in France, Emmanuel Macron has promised to increase the minimum wage 7% in 2019 and subsidized by the government. As mentioned previously this move alongside the u-turn on fuel tax rises could place France within the scopes of the European Commission regarding its own budget deficit.

 

 

 

  British Pound

It was another dramatic week in UK politics on Thursday as Prime Minister, Theresa May, survived a vote of no confidence brought upon her by members of her own Conservative Party. It was confirmed that the Tory backbench 1922 Committee had received the 48 letters needed from its MPs to trigger a vote of no confidence.

 

 

 

  Australian Dollar

With little on the economic calendar to drive direction the Aussie took its cues from off-shore sources. The fallout from the Huawei CFO arrest and the almost 5% decline in the S&P500 for the week saw global markets turn decidedly risk-averse. The Aussie was not spared from the sell-off, falling steadily throughout the week.

The WSJ reported that China was drafting a replacement for the Made in China 2025 policy and are planning on further opening their borders to foreign companies. The move has been touted as a significant olive branch to the US as the contentious policy has led to alleged intellectual property theft and forced technology transfers. Adding to the positive news from the trade war was President Trumps commitment to not raising tariffs until he finds out whether the two sides could reach a deal. He also mentioned that he’s happy to meet President XI again. Lastly, the Huawei CFO was granted bail in Canada and Trump has confirmed he would intervene if it would help achieve a trade deal with Chin

 

 

 

  New Zealand Dollar

The biggest influence on the NZD at this time is still the US-China relations among uncertainty over the trade talks.

The NZD fell throughout Tuesday trading session to bottom out at a one week low of 0.68311, before opening at 0.68527 this morning.

 

 

 

Posted by OFX

The Australian dollar is under pressure again

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian dollar finished the week lower when valued against the U.S dollar falling to 0.7176, not far from a 4-week low of 0.7150, undermined by renewed concerns over the outlook for global economic growth. On Friday we saw the release of Chinese Retail Sales data which increased by 8.1% YoY in November, well below the expected 8.8%. We also saw the release of China Industrial Production in the same period which rose by 5.4%, falling short from the market’s expectations of 5.9%.

On the release front, and Australia’s government will release its mid-year economic and fiscal outlook (MYEFO) later today. The Coalition is expected to reveal a multi-billion dollar improvement in the federal budget position, including a doubling of the projected surplus in 2019-20 to around $4 billion.

From a technical perspective, the AUD/USD pair is currently trading at 0.7171. We continue to expect support to hold on moves approaching 0.7150 while now any upward push will likely meet resistance around 0.7210.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0520 – 1.0590

The New Zealand Dollar began Friday’s session hovering comfortably above the 0.6850 level which has been a short-term resistance level for most of December. However, the NZD/USD pair came under heavy selling pressure as weaker-than-expected Chinese Retail Sales and Industrial Output saw a sell-off in global equities which in turn led the downward decline in the pair. The Kiwi touched a three-week low of 0.6777 and is just under the 68c mark at the time of writing.

On the data front, Friday saw the release of NZ Manufacturing Index which slowed slight in the month of November but remained around its long-term average levels. The Index edged down by 0.2 points from the previous month to 53.5. A reading above 50 indicates an expansion in activity, while anything below that threshold indicates a contraction.

Looking ahead, the local calendar is light today, the main focus this week domestically is third-quarter gross domestic product due out on Thursday.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7430 – 1.7700

The GBP continued it’s volatile week, opening at 1.2604 this morning against the USD. The Brexit saga continues with new developments almost every day. While PM Theresa May survived the confidence vote, opposition to the Brexit withdrawal group remains stout. There have been multiple exchanges between the UK Parliament and the EU leaders regarding the Irish backstop, which has been a key issue that has not yet been resolved.

The upcoming week sees multiple releases by the Office for National Statistics which are all expected to have a meaningful impact on the Pound. The earliest release will be on Wednesday, regarding the CPI and PPI. These indices track the change of price in goods and services purchased by consumers and manufacturers respectively. Both are a leading indicator of inflation and used primarily as the central bank’s inflation target.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7100 – 0.7220

The US Dollar Index touched high of 97.71 a level not witnessed since June 2017 on the back of investor fears and safe-haven buying. Economic data from China and Europe led the Greenback to new heights as declining Eurozone PMI added to the doom and gloom for the economy as well as weaker-than-expected Chinese retail sales and industrial production figures added to the malaise.

This week investors will turn their attention to monetary policy as statements from the US, Bank of Japan and Bank of England are all due. We can expect to see some volatility across the equity and currency markets especially as this is the last week before trader square up position before the Christmas holiday.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6320 – 0.6380

Friday was a day to forget for the Euro, which shed 0.5% on the day. Opening this morning at 1.1304, the Euro fell victim to a variety of internal and external pressures.

European PMI’s kicked things off on Friday with a batch of weaker than expected figures. In particular, the French Services and Manufacturing PMI’s dropped below 50, signalling a contraction. The result however, seems to be due to the recent Yellow Bests protests which continue to weigh heavily on business sentiment. The composite PMI for the entire Eurozone also fell, although to a healthier 51.3 reading. The result was however, still its lowest level since November 2014.

Broader factors continue to weigh on the Euro as well, with general global market anxiety continuing to undermine the Euro. Concerns over trade, Brexit and global growth continue to have a dampening effect on the Euro.

Moving into a new week, the Euro continues to keep a close eye on the headlines. CPI and Trade balance figures are also set to be released on Monday.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9550 – 0.9660

The Canadian dollar continued to see downward momentum on Friday and closed lower against the US Dollar for the fourth straight week. Opening at 1.3350, the US Dollar traded higher after the spotlight on retail sales in the United States saw a mild jump above expectations.

With oil prices plummeting 30% since October from $86 a barrel to $58 in December, the Canadian dollar continued to be subdued in the market as Bank of Canada looks to keep interest rates on hold at 1.75% from its last hike in October. It’s next increase will depend on how long the oil-price slump continues for and how the expansion of business growth for the local economy fares in future months.

The USD/CAD finished 0.2% higher after testing intraday highs of 1.3400 as a risk off market ensured little upside for the Loonie to close the week at 1.3380.

This week markets will focus on this week’s release of Canadian inflation figures which could have a major influence of the timing of future interest rate hikes by the Bank of Canada. There is a possibility of a major decline in CPI for the month of November following the recent downturn of energy prices.

The USD/CAD opens this morning at 1.3382

 

 

 

Posted by OFX

The US dollar rises after a six-month high following better than expected retail sales

OFX Daily Market News

Posted by OFX

  United States Dollar

The US dollar index came in at 0.2 percent this morning while the expected number was 0.1 percent. This pushed the US dollar index 0.6 percent higher to fresh six-month highs this morning.

Furthermore, worries over the global economy remain in the global markets following disappointing economic data from China and the Eurozone, sending the US dollar higher in overnight trading and erasing all the losses the US dollar had during the week. On top of that, equity futures in North America are moving lower and performing as if everything depends on U.S.-China trade. Many economists expect the trade conflict to continue despite a 90-day tariff truce that Mr. Trump and his Chinese counterpart, Xi Jinping, reached in early December.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3357 – 1.3405

The USD/CAD had a tranquil day in yesterday’s session. It traded in a narrow range of 45 pips from 1.3338 to 1.3383, with the key piece of information being the new housing price index month to month and year to year, which came in with no surprise at 0 percent and 0.1 percent respectively.

For next week, the most critical information releases will be the consumer price index on Wednesday and the gross domestic product on Friday. A higher increase in the Canadian CPI number compared with its main counterpart, the US CPI, would influence a stronger Loonie and vice-versa. Last Wednesday, the American CPI (YoY) came in at 2.2 percent, which was the same as expected. For the Canadian economy, the previous CPI YoY came in at 2.4 percent (a month ago); however, the forecast is 2.2 percent for this Wednesday, which is the same as the US CPI. Fundamentally speaking, it would be interesting to see a surprise in the CPI in Canada this Wednesday because it would give us a better idea of where the USD/CAD is going.

This morning, the USD/CAD is trading at 1.3375, after going higher in overnight session and touching a high at the 1.3400 handle. There is no economic data today.

 

 

 

  Euro

EUR / USD Expected Range: 1.1253 – 1.1306

It’s been a painful 24 hours for the Euro with soft rhetoric from European Central Bank Chief Mario Draghi yesterday being followed by weak data from the bloc in the overnight session. The latest ECB interest rate decision saw no change in policy re: interest rates, which was as expected. We also saw confirmation of the end of its Quantitative Easing program this month, which had also been expected by the markets. The main area of focus was the press conference which saw a dovish tone cut by Draghi, where he highlighted a slowdown in output from the bloc and changed his language re: risks from being “broadly balanced” to being “tilted to the downside.”

EUR/USD is falling 0.70 percent to 1.1275. Extra downward pressure has been exerted with both French Manufacturing and the Services PMI dropping below 50 for the first time since Sept 2016 and June 2016, respectively. The services figure was particularly eye-catching as the 49.6 shown was expected to be 54.8, a huge miss.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2517 – 1.2666

The UK Prime Minister, Theresa May, traveled to Brussels yesterday trying to get some concessions from the EU, mainly the Irish backstop in an effort to salvage her Brexit deal. The Pound has slipped this morning as it appears that EU leaders are unwilling to give any ground legally on the matter and have issued little by way of verbal assurances that the arrangement will be temporary. The trip is starting to look a little like May’s trip to Salzburg in September, where the first incarnation of the so-called “Chequers plan” resulted in a stonewalling from EU leaders left the PM looking isolated.

We are now in a potentially dangerous time for the UK economy. May looks like she’s going to run down the clock to a no-deal in an effort to force her plan through parliament. EU leaders look like they aren’t willing to budge on the current proposal. And Brexiteers have dug their heels against any Customs Union relationship. If something/someone doesn’t give soon, then we could be looking at a chaotic, disorderly exit at the end of March, which will have a devastating impact on the Pound and the broader UK economy. GBP/USD, which had rallied to around 1.2680 yesterday, is now trading at 1.2541, which is almost 1 percent lower and it does not look to change unless we get some positive news from the EU today.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7138 – 0.7180

Risk off trade has hit the Aussie dollar hard overnight and this morning. The impact from Chinese industrial production has hit the local dollar with AUD/USD falling from 0.7247 to around 0.7153 at the time of this writing.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6772 – 0.6825

Like the Aussie dollar, the Kiwi has fallen on the soft China data. The NZD/USD dropped from around 0.6879 to 0.6778 at the time of this writing. Next week’s significant number from NZ is Wednesday night’s GDP figure with holders of the Kiwi hoping for a similar result to Q2s 1 percent growth.

 

 

 

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Aussie extends its gains amid positive trade war news

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar pair edged marginally higher for a fourth consecutive day, extending its gains to as high as 0.7246 before trimming the positive momentum at the close. Opening this morning at 0.7222, the Aussie has been the beneficiary of a general risk-on tone throughout the week as the news from the US-China trade war improves.

Overnight, the WSJ reported that China was drafting a replacement for the Made in China 2025 policy and are planning on further opening their borders to foreign companies. The move has been touted as a significant olive branch to the US as the contentious policy has led to alleged intellectual property theft and forced technology transfers. Adding to the positive news from the trade war was President Trumps commitment to not raising tariffs until he finds out whether the two sides could reach a deal. He also mentioned that he’s happy to meet President XI again. Lastly, the Huawei CFO was granted bail in Canada and Trump has confirmed he would intervene if it would help achieve a trade deal with China.

Moving into Friday, there is little on the domestic calendar to excite markets. China is set to release its retail sales, industrial production and fixed asset investment for November however that should pique the interest of investors.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0460 – 1.0600

The NZD held steady during yesterday’s trading session with no developments on the US-China trade relations and no major macroeconomic data released. This morning, Business NZ released their manufacturing index data which resulted in the same figure as last month at 53.5.

ANZ will release their business confidence data next week Tuesday morning which is expected to have a major impact on the Kiwi. This data is a leading indicator of economic health that measures how quickly businesses react to market conditions. Last month’s figure sits at -37.1, and a release above 0.0 indicates optimism for the NZD.

The NZD opened at 0.68630 against the USD this morning.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7300 – 1.7660

The Great British Pound is stronger this morning when valued against the Greenback after UK Prime Minister Theresa May survived a no confidence vote from her party but investors said the currency’s gains could quickly evaporate if Britain’s parliament remains deadlocked over Brexit.

On the release front, just like Thursday, there are no scheduled releases today. We expect the Pound Sterling will remain under pressure as the market continues to adjust expectations amid political instability and an ever-evolving Brexit platform.

From a technical perspective, the GBP/USD pair is currently trading at 1.2653. We continue to expect support to hold on moves approaching 1.2590 while now any upward push will likely meet resistance around 1.2665.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7170 – 0.7300

All attentions last night turned to UK Prime Minister Theresa May after she survived a no confidence vote from her party. The Pound Sterling rallied against the Greenback to a daily high of 1.2686, moving away from a 20 month low, before settling around 1.2650.

Looking ahead today on the release front the US will release Retail Sales figures for the month of November, seen up 0.4% MoM, along with Industrial Production for November, and Purchasing Managers’ Index (PMI) which should see a modest uptick in the manufacturing sector.

From a technical perspective, for a fourth consecutive day the Greenback is slightly weaker this morning with valued against the Aussie dollar which is currently trading at 0.7222. The Greenback has opened flat against the Kiwi dollar with the NZD/USD pair currently trading at 0.6853.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6290 – 0.6390

The Euro fell modestly overnight as the European Central Bank failed to surprise markets with their monetary policy settings however president Draghi’s comments that downside risks were mounting forced the Euro marginally lower. In the leadup to the announcement the Euro was testing key resistance at 1.1400 but ultimately failed to break higher. The EUR/USD fell from 1.1390 to 1.330 after the dovish comments from Draghi before rebounding to levels closer to 1.1365 as the greenback posted mixed results on the day.

Friday’s session see’s Eurozone PMI’s released for the month of December as well as the Q3 labour cost read. The Economic and Financial Affairs council are also set to meet however it is not expected to have an impact on markets. The key release for the EUR/USD pair is US retail sales figures for November due out of the world’s largest economy.

On the technical front, we see downside supports at 1.1330 before the key psychological level of 1.1300 whilst on the upside we still see resistance at the 1.1400 handle with any moves through this level expected to meet further resistance on moves approaching 1.1425.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9570 – 0.9670

The Canadian Dollar moved within a 40 pip range on Thursday between a low of 1.3338 and a high of 1.3383. In the absence of any top tier local data markets didn’t have much to react to and looked towards the States at their inflation numbers where import prices dropped last month being the biggest decline since August 2015.

Local data released by Statistics Canada saw new housing prices unchanged on a national basis for a third month in a row. However, looking individually at cities house prices fell in eight of the 11 cities surveyed in the index. The only two cities that saw increases where Windsor and Ottawa.

The local calendar is light on the last day of the week, markets will turn their attention to the anticipated US Retail Sales.

 

 

 

Posted by OFX

The US dollar rises after lower numbers in the unemployment claims and Mario Draghi’s speech at the ECB

OFX Daily Market News

Posted by OFX

  United States Dollar

The US dollar index fell around 0.5 percent in yesterday’s session on an improved risk sentiment, as PM May won her confidence vote (200-117) in the UK. WSJ reported that China is going to rethink its “Made In China 2025” policy, which means that it may open it’s markets to foreign companies in a move to help resolve trade tensions with the US.

This morning however, the US dollar index is rising 0.2 percent. The European Central Bank’s governing council confirmed they will stop expanding quantitative easing (QE) from the end of December (it marks a historic moment for the ECB), and Mario Draghi stated that the balance of risk is moving to the downside.

On the release side, the unemployment claims came in at 206k when the forecast was 226k. This also helped the Greenback to make a comeback to the upside.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3321 – 1.3381

The USD/CAD fell to 1.3350 (Loonie appreciation) yesterday morning. This was as a result of a weak US dollar and the WSJ reporting that China is going to rethink its “Made In China 2025” policy, which means that it may open it’s markets to foreign companies in a move to help resolve trade tensions with the US.

On the release front, the new housing price index month to month and year to year came in at 0 percent and 0.1 percent respectively, as expected in both cases. More significant numbers than expected are good for the Loonie, because it is a leading indicator of the housing industry’s health. Rising house prices attract investors and spur industry activity. Today’s data is pushing the USD/CAD higher (weaker Loonie) however, because there was not a positive surprise. The US/CAD pair is trading at 1.3378, up 0.20 percent.

 

 

 

  Euro

EUR / USD Expected Range: 1.1315 – 1.1400

The European Central Bank leaves its interest rates unchanged, and confirms the end of QE in 2019. The ECB’s governing council confirmed they would stop expanding quantitative easing (QE) from the end of December when bond purchases fall from 15 billion euros a month to zero. It marks a historic moment for the ECB, as President Mario Draghi dismantles one of his most contentious policies. The ECB also said it would continue to reinvest cash from maturing bonds for an extended period.

The EUR/USD is falling slightly – 0.19 percent – to 1.1346 this morning.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2563 – 1.2693

The GBP/USD rallied 1.3 percent yesterday, with most of the rally done before the actual confidence vote took place; 185 MPs said they would support PM May (she needed 159). The good news is that the European Research Group cannot challenge May’s leadership for another 12 months, but the bad news is that she is still facing stiff opposition with 117 voting against her. This opposition gives an indication of how resilient some will be to getting the Brexit vote through Parliament, and why GBP rally was limited after the vote. At this moment the GBP/USD pair is trading at the same highest level achieved yesterday – 1.2669 – which is a strong resistance.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7218 – 0.7299

The rally in Asian equities helped the Aussie dollar to trade higher overnight and in this morning’s session, as an improvement in tone between the US and China regarding trade helped risk assets. The Aussie dollar has recouped some it’s losses since last Friday, however the gains are relatively modest. AUD/USD is at 0.7228 – up 0.18 percent – after bouncing off from the 0.7200 handle. In the absence of any domestic data, the US-China Trade issue will be the primary mover for the Aussie for the rest of the week.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6851 – 0.6897

The Kiwi has mirrored the Aussie dollar’s modest appreciation over the past 24 hours, as a mildly risk-on tone benefits the Kiwi-dollar. There is little in the diary for the rest of the week, however next week sees ANZ business confidence numbers and GDP figures being published. The NZD/USD pair is trading at 0.6867 – up 0.15 percent.

 

 

 

Posted by OFX

Australian Dollar range bound and struggling to break 0.7250

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar managed to hold its head above 72c vs the Greenback throughout Wednesday trading session. The AUD/USD pair didn’t react too much to outside influences and moved between a low of 0.7201 and a high of 0.7237. Locally we saw the release of Westpac Consumer Sentiment which edged up 0.1% in December to 104.4. This reading is comfortably above 100 indicating more consumers are optimistic than pessimistic. The consumer sentiment index has held above the 100 neutral level for 13 consecutive months.

Looking ahead we see the Melbourne Institute’s Inflation Expectations and the RBA bulletin.

On the technical front, 0.7250 is seen as first line of resistance and continues to be important from a technical stand point. Support is around 0.7190

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0430 – 1.0580

The NZD fell throughout yesterdays trading session to bottom out at a one week low of 0.68311, before opening at 0.68527 this morning. The NZD is the only currency in the G10 pool to fall against the USD overnight, despite a broadly weaker USD and positive news on the US-China trade relations. This is speculated to be technical-related rather than fundamental, as it has struggled to punch through the 0.6900 handle.

Manufacturing data released tomorrow by Business NZ is expected to provide a small impact to the Kiwi. It is a survey of manufacturers that asks it’s responders to rate their level of business conditions including data such as employment, production and inventories which can be a leading indicator of economic conditions. This announcement is scheduled for 08:30 AEST.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7250 – 1.7740

The Great British Pound rallied through trade on Wednesday, bouncing back from 20-month lows despite conservative colleagues triggering a vote of no-confidence in a bid to oust Prime Minister May. Dropping to 1.2475 Sterling rallied as the PM delivered a stoic address, striking a defiant tone and warning MP’s they risk delaying and derailing Britain’s European exit. Early polls suggested the incumbent PM would shake of the leadership challenge and gather the 159 votes required to remain in office and as official numbers filtered in it became evident May would beat back key challengers and comfortably hold onto office. Having secured 200 of the possible 317 Conservative votes May buys herself another 12 months in the top job, with a comfortable majority staving off calls for her to resign.

Sterling’s near-term fate now returns to broader Brexit outcomes with a hard no-deal exit likely to foster a sustained period of weaker economic growth, weighing on BoE policy and prolonging a period of accommodative monetary policy.

With the leadership ballot behind us attentions now turn to ongoing Brexit negotiations as May returns to Brussels in a bid to negotiate an alternative solution to the Irish border backstop.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7160 – 0.7280

The USD rose against most other major currencies yesterday amongst positive reports on the US-China trade talks, except GBP as PM Theresa May survives the no-confidence vote resulting in a rally in the GBP.

Overnight the Wall Street Journal reported that China might revamp it’s Made in China 2025 Industrial policy and planning to allow greater access to its markets for foreign companies. This has been one of the sticking points in the US-China trade relations, as the US has accused China of intellectual property theft to achieve its goal of becoming a leader in advanced manufacturing by 2025. A change in direction from China would increase the chances of the two sides coming to a trade agreement. Furthermore, President Trump stated yesterday he would not raise tariffs on Chinese imports until they can decide whether they can reach a deal.

Just after midnight on Saturday, the Census Bureau will release it’s data on retail sales which will outline the change in the total value of sales at the retail level. This is a monthly release that is the primary gauge of consumer spending, which accounts for the majority of the overall economic activity.

The USD opened at 1.38621 against the AUD this morning.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6280 – 0.6390

The Euro rallied through trade on Wednesday pushing back through 1.1350 and testing a break above 1.1385/1.14. The single currency was buoyed by reports Italy had submitted a more favourable budget deficit proposal for 2019. The reduction to -2% of GDP triggered a fall in 10 year Italian bonds while helping bolster German bond yields in risk on trade.

Attentions now turn to today’s ECB policy meeting. Markets are priced for a dovish end of the current QE Facility, with some scope for the Euro to test moves beyond 1.14 and toward 1.15 if Draghi and the board proffer a balance assessment of future prospects. Beyond QE market focus turns to re-investment and an expectation for this to continue through 2020. Short Term Euro direction will be governed by the ECB’s forward guidance, any indication the bank’s reinvestment timeline extends less than two years maybe seen as hawkish and drive the single currency higher.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9580 – 0.9690

The USD/CAD traded within a tight range during Wednesday Asian and Early European session moving only between a high of 1.3395 and a low of 1.3368. As the North American session came underway the Canadian Dollar benefited from a drop in US inflation data, CPI was unchanged from a month earlier slowing from the 0.3% increase seen in October. Analysts had forecast a 0.1% increase. The Loonie touched a low of 1.3322 which was quickly reversed as local data overshadowed. Industrial capacity utilization rates for Canada were down to 82.6% from 84.1% in the previous quarter. The decrease in the third quarter was mainly attributed to declines in the manufacturing industries and saw the USD/CAD move back up around 1.3365

Data wise todays sees New Home Price Index which has not moved much in recent months. It was flat in the past two months and is projected to remain unchanged also in the upcoming report for October.

On the technical front, we see immediate resistance at 1.3390 followed by 1.3430 and supports sits at 1.3330 and 1.3290.

 

 

 

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The US dollar falls due to mute inflation numbers

OFX Daily Market News

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  United States Dollar

It was a positive session for the US dollar yesterday, rising 0.36 percent; however, the US dollar index is falling 0.33 percent this morning. The consumer price index month to month came in at 0 percent, which was the same as expected, while the previous month was at 0.3 percent. At the same time, the core consumer price index came in at 0.2 percent, which was also the same as expected, while the last month was at 0.2 percent. There were no surprises.

Global stocks experienced gains this morning on a fresh wave of trade optimism and climbing oil prices, shrugging off a leadership challenge against U.K. Prime Minister Theresa May.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3333 – 1.3386

The Loonie appreciates this morning while the USD/CAD falls 0.16 percent at the time of this writing. West Texas Intermediate Futures were up 1.5 percent at US$ 52.58 a barrel after weekly American Petroleum Institute figures revealed a larger-than-expected fall in U.S. inventories on Tuesday. The US dollar index fall is helping the Lonnie as well, given that the CPI numbers in the US came in at the same level as expected. Market participants are waiting for Canadian consumer price index numbers to be released next week to have a better view of where the USD/CAD is heading next. For now, the USD/CAD pair will have movements based on the US dollar drivers.

Global stocks rose this morning on a fresh wave of trade optimism and shrugging off a leadership challenge against U.K. Prime Minister Theresa May. This “risk on” mood in financial markets is helping the Loonie.

 

 

 

  Euro

EUR / USD Expected Range: 1.1300 – 1.1406

The rhetoric from Italy around their budget stepped up considerably this week with Italy’s Di Maio yesterday announcing that the next few days will be crucial. It is very much the case as well that Italy is calling double standards pointing out that France will fail the EU’s budget rules, given Macron’s u-turn and relief on fuel tax rises alongside the promise of increasing the minimum wage.

The EUR/USD is rising 0.37 percent to 1.1358, as there is no surprise in the inflation numbers in the US, which is weakening the US dollar along with all its crosses.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2323 – 1.2886

The rumor yesterday that 48 MPs had written letters of no confidence to Sir Graham Brady, Chairman of the 1922 Committee, has been confirmed this morning while traveling Europe to renegotiate her Brexit agreement. Additionally, it would appear that Theresa May has let her eye off the ball at home regarding the Irish backstop. This is the news that May would have been dreading, and despite Jacob Rees Mogg rallying his troops over three weeks ago, it would appear that Monday’s decision from May to postpone the Meaningful Vote has galvanized proceedings. This move has seen the Pound slip and retests the 20-month lows seen at the start of the week.

The GBP/USD is rising strongly this morning, advancing as U.K. Prime Minister Theresa May faces a vote of no-confidence. The election is expected after the London close, around 1 pm – 3 pm, with results expected around 4 pm Eastern time.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7162 – 0.7241

The Aussie dollar took relief from the comments yesterday from Trump regarding progress with China. This was further supported by the news that Huawei’s CFO Meng Wanzhou is to be released on bail. Looping back to the US-China trade war, this is further proof and an indication that slow progress is being made.

The AUD/USD is rising 0.26 percent to 0.7223 this morning.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6824 – 0.6891

The Kiwi mostly followed its Aussie neighbor yesterday, buoyed by the news that China-US relations eased. The Kiwi gained against the US dollar as risk sentiment waned while, against the Pound, the Kiwi’s performance was driven by events in the UK. However, The NZD/USD pair is falling 0.37 to 0.6848 this morning.

 

 

 

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Aussie shifts higher on news US/China Trade talks progressing

OFX Daily Market News

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  Australian Dollar

The Australian Dollar maintained a tight trading range throughout Tuesday bouncing between 0.7185 and 0.7225 closing marginally higher on the day. News the US and China have engaged in high-level, constructive dialogue on trade and confirmation China will cut tariffs on US auto imports has bolstered investors demand for risk and added a backstop behind the AUD’s recent slide.

Having struggled to push back through 0.72 for much of the Australasian session, positive trade talks helped the AUD drive toward intraday highs at 0.7224. Upside moves were however checked as investors refrain from extending upside expectations on headline news alone. Markets are conscious and wary of moving to early on upbeat trade headlines, preferring to sit back and await a clear cut signal an end to the trade dispute is forthcoming.

While seemingly well supported on moves approaching 0.7175/0.7150 we expect the AUD will continue to bounce amid a wider 0.7150 – 0.7280/0.73 range through the short term. Attentions turn to Westpac Consumer Sentiment as a marker for domestic economic performance while global geo-political risks continue to weigh on risk appetite and cap short term AUD gains.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0395 – 1.0550

The NZD rose higher yesterday hitting an intraday peak of 0.6904 against the USD. This is due to the positive news that the US and China have had high-level dialogue on trade, and that China would cut tariffs on imported US cars.

With lack of high impact macroeconomic data in the near future, NZD holders can look out for the statements being released by Statistics New Zealand tomorrow regarding changes in the Food Price Index (FPI). It is a monthly release, but not expected to provide much volatility in the Kiwi. A figure above last months of -0.6% will be a positive for the dollar.

The NZD opened at 0.6876 against the USD this morning.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7180 – 1.7725

The Great British Pound suffered deeper losses through trade on Tuesday on reports Theresa May’s tenuous hold of office may finally break. Having bounced off one and a half year lows to push back above 1.26 and touch 1.2640, a stronger dollar and suggestions MP’s pushing for a vote of no-confidence may finally have the numbers sent the embattled unit lower. The heightened political instability has bolstered expectations the UK will be forced to leave the common market without a firm deal in place, raising questions as to the impact on UK economic growth and longer term Sterling strength. Tumbling through 1.25 the pound touched lows at 1.2498 as attentions remain squarely affixed to headline risk.

GBP fortunes remain pinned to ongoing Brexit and political developments making it almost impossible to suggest this is the bottom for the GBP. Having fallen through the last 4 weeks consecutively Sterling’s fates hangs on whether May can enact a last-minute renegotiation with Brussels. Early signs suggest EU spokesmen and women are unwilling to yield, forcing the current Withdrawal Agreement to a Parliamentary vote (before Jan 21).

As one week volatility moves nearer its highest level in the last 12 months ranges are becoming increasingly harder to forecast and we expect the GBP will continue to whipsaw in response to headline news events.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7130 – 0.7280

Overnight the Greenback hit a one-month high against a basket of rival currencies as China and the United States discussed plans for talks to avert a trade war between the world’s two biggest economies. The positive news continued as China announced it´s considering reducing tariffs on American cars from 40% to 15%.

On the release front yesterday the Producer Price Index for final rose up 0.1 percent in November the fastest in six years. Final demand prices advanced 0.6 percent in October and 0.2 percent in September. Looking ahead today and all eyes will be on the release of Consumer Price Index (CPI) for the month of November.

From a technical perspective, the Great British Pound was down 0.6 percent currently trading at 1.2489 after falling to a low of 1.2479, which was the lowest since April 2017. The euro was 0.31 percent lower trading at 1.1317. The AUD/USD pair is currently at 0.7200.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6220 – 0.6480

Overnight the Euro hit a high of 1.1399 against the U.S. dollar, just missing the 1.1400 level, but fell to low of 1.1306 shortly after as political turmoil in Europe alongside with a fading momentum in Wall Street benefited the greenback in the American afternoon.

On the release front today in the EU we will see the release of Industrial Production for the month of October. However, all eyes will continue to be on the Brexit turmoil.

From a technical perspective, the EUR/USD pair is currently trading at 1.1317. We continue to expect support to hold on moves approaching 1.1295 while now any upward push will likely meet resistance around 1.1345.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9580 – 0.9750

The domestic docket offered little to excite investors throughout Tuesday’s trading session and the direction of the USD/CAD was governed by events out of the United States. The Canadian Dollar weakened vs the worlds reserve currency and the pair broke through 1.3400 on the back of a stronger greenback following US November PPI numbers. U.S. producer prices unexpectedly rose in November as increases in the costs for services offset a sharp decline for energy products, but the overall momentum in wholesale inflation appears to be slowing. The pair also lost ground to further weakening in the price of crude oil.

Data wise, today sees the release of the Capacity Utilization Rate. This measure of the industry provides the BOC insights on the level of slack in the economy. Utilization has been fluctuating in the mid-80s in recent quarters. After 85.5% in Q2, a small increase to 85.8% is expected for Q3.

On the technical front, we see immediate resistance at 1.3400 followed by 1.3430 and supports sits at 1.3335 and 1.3290.

 

 

 

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The US dollar falls despite higher than expected numbers in the producer price index

OFX Daily Market News

Posted by OFX

  United States Dollar

It was a positive session for the US dollar yesterday. It appreciated 0.5 percent, acting as a reserve currency due to lousy news elsewhere, including Brexit, weak China data, lower oil prices, and lingering issues such as the arrest of the daughter of Huawei’s founder.

However, this morning, the US dollar index is falling slightly – 0.02 percent – despite an improved mood in global markets. The U.S. and China started the latest round of trade talks involving Treasury Secretary Steven Mnuchin, U.S. Trade Representative Robert Lighthizer, and Chinese Vice Premier Liu He. The three senior officials discussed Chinese purchases of agricultural products and changes to critical Chinese economic policies.

On the release side, the producer price index ex-food and energy month to month (November) came in at 0.3 percent, while the expected number was 0.1. The PPI year to year came in at 2.7 percent when the read was at 2.5 percent. These numbers will likely give us good insight into consumer price index numbers, which will be published tomorrow.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3315 – 1.3367

The Loonie moved lower, acting inversely correlated to a strong US dollar index in yesterday’s session. The USD/CAD pair moved 0.5 percent higher (weak Loonie) in the middle of a “risk off” environment in the FX market. This morning, the story is different. The Canadian currency is getting support from higher oil and also from a robust comeback of global equities. The USD/CAD is falling 0.18 percent (strong Loonie).

On the release front, housing starts for November came in at 215.9 k when the expected number was at 198k, and building permits month to month came in at -0.2 percent when the expected number was -0.3 percent. The market entirely ignored those numbers, focusing only on global jitters and the US dollar as a haven currency.

As of this writing, the market sentiment is still negative for the Loonie; the BoC might be on the sidelines after it’s policy meeting last week and it is expected to stand pat again in January. However, the USD/CAD pair might find a direction sooner, with the Fed expected to scale back its “gradual rate hike” policy to just one hike next year. Therefore, it will be a matter of which bank is expected to raise rates faster to have a better clue of the direction of the USD/CAD.

 

 

 

  Euro

EUR / USD Expected Range: 1.1322 – 1.1406

Eurozone investor confidence dropped negatively for the first time seen since December 2014 in a move that doesn’t come as a surprise to many given the uncertainty across Europe and where we currently sit in the economic cycle. Divisions within Italy are also beginning to emerge between Conte, Tria, Salvini and Di Maio, as the first two look to persuade the others that the budget deficit target should be lowered. Elsewhere in France, Emmanuel Macron has promised to increase the minimum wage 7 percent in 2019. This move, alongside the u-turn on fuel tax rises, could place France within the scopes of the European Commission regarding it’s budget deficit. The EUR/USD pair is moving slightly higher this morning, trading at 1.1365.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2500 – 1.2800

There are perhaps not enough superlatives or metaphors to describe the events currently unfolding within the halls of Westminster or Downing Street, but an apt one maybe is that the ‘left-hand does not know what the right hand is doing.’ This was perfectly illustrated early on Monday when a No. 10 spokesperson confirmed that the Meaningful Vote would go ahead today as Michael Gove and everyone assumed. What quickly transpired was that May shelved the vote and took the option to avoid a hefty defeat. There was always the anticipation this week that Sterling volatility would be the central theme, but yesterday demonstrates once again the importance of considering every Brexit scenario. The Pound has dropped to 18-month lows against the US Dollar and 2.5-month lows against the Euro. Moving forward, Theresa May is now off back to Brussels to try and renegotiate the Irish backstop agreement, but the EU has been adamant that this is the best Brexit deal on offer. Other scenarios to keep an eye out for include a no-confidence vote in the government or a leadership challenge. The only thing that is indeed true of Brexit is that it is not binary whatsoever, it is not a choice between two options, and it is not like either one of two scenarios will unfold.

In amongst all of this, Monday also saw the latest release of the UK’s GDP figures, which showed flat growth for August and September before hitting the dizzying heights of 0.1 percent for October – hardly inspiring. The GBP/USD pair is moving 0.41 percent higher this morning, trading at 1.2610.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7200 – 0.7244

Business conditions and business confidence have dropped off recently in Australia, as reiterated by the NAB’s latest survey; however, the Aussie dollar largely shrugged off this release. The AUD/USD pair is moving 0.44 percent higher this morning, trading at 0.7222.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6870 – 0.6915

The Kiwi tends to strengthen in periods of heightened uncertainty, and yesterday was no different. The New Zealand dollar finished yesterday on the front foot against the Pound, mainly due to the news out of Westminster. The NZD/USD pair is trading 0.53 higher this morning at 0.6905.

 

 

 

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