Good fundamentals of the USD dollar index, bad fundamentals of the Pound, Euro and Aussie dollar helping the greenback rally

OFX Daily Market News

Posted by OFX

  United States Dollar

The USD strength was led by a “risk on” environment and low yielders being sold, ie. EUR, GBP, CHF, and JPY. The USD Consumer Confidence Index increased again in October, following a modest improvement in September. The Index now stands at 137.9, up from 135.3 in September. Also, the Present Situation Index – based on consumers’ assessment of current business and labor market conditions improved from 169.4 to 172.8 in October.

A few signs of a weakening housing market in the US are starting to show through but were brushed aside with the ” risk on” environment, today and yesterday. Case-Shiller US home prices grew 0.1% (MoM) in August, leading to a slowing in % YoY home price appreciation to 5.8% from 6% in August. Similarly, the 20-city composite slowed to 5.5% from 5.9%, which was well below consensus at 5.8%.

For the Greenback, the USD Change in Non-farm Payrolls (OCT) is expected at 193,000, and the USD Unemployment rate (Oct) is expected at 3.7% this Friday. Any significant difference with the actual numbers can imply higher volatility for the US dollar vs. its crosses.

In the meantime, Donald Trump has become a severe market analyst tweeting yesterday that if the Fed ‘backs off and starts talking a little more Dovish, I think we’re going to be right back to our 2,800 target for the S&P’. The US equity market is in a price rally yesterday and today after Trump was lifting some of these ideas from Wells Fargo.

The USD dollar index continues on a steady path, touching new highs every day. It keeps its breakout of the 97.00 level seen yesterday, and it is trading at 97.17 at this moment with a strong move that might find resistance around 97.50.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3080 – 1.3150

The Canadian Dollar rallied higher after the leader of the Bank of Canada, Stephen Poloz was bullish in his remarks yesterday at the House of Commons Standing Committee on Finance. He said “..even with last week’s increase in the policy rate to 1.75 percent, monetary policy remains stimulative…” meaning that the BoC will need to raise its rate to be neutral to achieve the inflation target and pull inflation back from recent highs of 3% in July.

Despite that, crude oil did not help the Loonie. Crude is falling from its highs in October 3rd 14.3%, trading right now at US$ 65.90 per barrel.

On the release front, Canada’s GDP (MoM) at 0.1% vs. 0.0% reading, and Canada’s GDP (MoM) at 2.5% vs. 2.4% reading are showing a better outlook for the Canadian economy.

Despite better news about the Canadian economy, the USD/CAD is trading flat at 1.3136, trying to consolidate in a narrower range from yesterdays’ high at 1.3147 and yesterday’s low at 1.3100

 

 

 

  Euro

EUR / USD Expected Range: 1.1300 – 1.1385

The lousy week continues for the Euro as yesterday’s GDP figures missed expectations across the board. Italy’s growth rate fell to a modest zero, in a blow to the government’s plans to kick-start the economy and it would appear that the trade protectionism coming out of the US is beginning to take hold in Europe. There may not be much hope in sight or a recovery soon either with economic confidence in Europe also dropping off and missing expectations. Lingering Italian fiscal woes and a softening growth outlook continue affecting the Euro as well.

In the economic calendar, the consumer price index core (YoY) for the Euro-Zone at 1.1% vs. 1.1% reading, and the consumer price index estimate (YoY) for the Euro-Zone at 2.2% vs. 2.2%.

Also, today, the 3rd quarter GDP data failed to meet market expectations and offers a stark contrast to the strong growth enjoyed within the US. The Eurozone grew at just 0.2% between July and September, and the Eurozone increased (YoY) at only 1.7% vs. 1.8% reading.

The Euro continues falling from yesterday highs of from 1.1388, touching lows just minutes ago of 1.1311. It is trading around 1.1318 this morning

 

 

 

  British Pound

GBP / USD Expected Range: 1.2696 – 1.2800

The cable was struggling as retail sales dropped shown by the latest CBI survey from October. The forecast was 20, but the headline balance fell to 5, which was the weakest since April. That was a sharp slowdown in this survey which back in June was signaling 6% volumes growth. This steep fall in consumer spending growth is why the UK GDP growth might slow into 4Q.

With the Bank of England decision just around the corner tomorrow at 6:00 am ET, the pound is struggling and in need of some positive news. The GBP/USD had fallen from the high of 1.3299 on September 20th to 1.2696 yesterday, this represents a fall of 4.5% against the USD, and it is now looking at lows not seen since the middle of August.

From a technical perspective, the GBP/USD pair is currently trading at 1.2715. We continue to expect support to hold on moves approaching 1.2696 while now any upward push will likely meet resistance around 1.2800.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7020 – 0.7160

The Aussie dollar is flat this morning after the nation’s inflation data missed estimates, while China’s economy also showed signs of a slowdown. It spurred interbank dealers to price AUD/USD lower immediately. The annual trimmed-mean CPI, the fundamental core measure, rose 1.8% in the third quarter compared with a forecast of 1.9%. Regarding China, China’s manufacturing PMI fell to 50.2 in Oct., lower than estimated and down from 50.8 in the prior month. Non- manufacturing index also dipped as the economy suffers from the trade war with the U.S.

While Australia’s 3Q CPI showed less inflationary pressure than in prior quarters, the RBA had flagged several one-off factors as likely leading to weaker gains, according to a note by Nomura analysts who expect price pressures to increase, albeit very slowly, with wage growth edging higher and a lower AUD adding modestly to inflation.

After the Aussie performed strongly in yesterday session, touching an intraday high of 0.7122 at 11:00 am ET, it has been falling to touch intraday lows of 0.7073. If there are no additional catalysts, it should move in a range of 0.7020 and 0.7160.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6480 – 0.6575

The New Zealand confidence amongst businesses remains flat as shown by the latest ANZ Business Outlook which also showed that residential and commercial construction intentions were dropping off a cliff.

However, the Kiwi, along with its Aussie counterpart, outperformed in yesterday session as US equities rebounded in the positive trade-related news.

In an interview with Fox News, President Trump raised the possibility of a “great deal” with China following on from yesterday’s Bloomberg report which indicated Trump was prepared to go ahead with tariffs on all Chinese imports if talks at the G20 summit next month failed to reach an agreement.

Key technical levels to consider for the NZD/USD are 0.6480 on the downside and 0.6575 on the topside.

 

 

 

Posted by OFX

Australian Dollar outperforms on U.S. Equity rebound

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Aussie dollar performed strongly overnight, rising from intraday lows of 0.7051 to touch weekly highs of 0.7120 before retreating slightly to settle around 0.7102 heading into Sydney morning. This is despite weakness in key commodity prices, with oil and copper falling amid further US-China trade tensions. The local unit also fared well against the crosses, with AUD/EUR rising from 0.6192 to 0.6261 following weaker than expected GDP numbers out of the Eurozone. The AUD/NZD also rose modestly from 1.0820 to 1.0840 as the NZD also demonstrated firmness against a backdrop of a rising greenback.

A busy day ahead for the Aussie with Q1 CPI due out at 11:30am Sydney time. Markets are expecting underlying inflationary to show 0.3% and 1.9% on quarterly and yearly metrics. As we know, the CPI is a core input for the Reserve Bank’s monetary policy outlook so expect any deviations from market expectations result in volatility in the Aussie.

Next off the block is Chinese PMI surveys for October which are due at 12pm Sydney time although market consensus is for little change despite the holiday period to begin October. AUD/EUR traders will also be keeping an eye on Wednesday night’s Eurozone CPI data with markets expecting an uptick from Septembers 1.1% yearly read.

We expect any further upside moves in the AUD/USD to meet technical resistance on approach to the 0.7150 level ahead of 0.7200. The first level representing the 50 day moving average and the later a key psychological level and October high. On the downside, we see the pair as being relatively well supported at the October 29th low of 0.7045 whilst any breaks below this could look to test the key psychological support evident at 0.7000.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0800 – 1.0900

The Kiwi, along with its Aussie counterpart, outperformed overnight as US equities rebounded and commodity prices retreated amidst a volatile and cautious environment. In positive trade related news, in an interview with Fox News, President Trump raised the possibility of a “great deal” with china following on from yesterday’s Bloomberg report which indicated Trump was prepared to go ahead with tariffs on all Chinese imports if talks at the G20 summit next month fail to reach any agreement.

NZD/USD is up 0.5% to open this morning at 0.6550 and also moved higher against all the crosses except the AUD/NZD where it shed 20 pips. NZD/EUR rose to 0.5775 as weaker than expected GDP numbers forced the cross lower. NZD/GBP also lifted to 0.5160 as Ratings agency Standard & Poor indicated elevated Brexit risks would begin feeding into their ratings, going as far as predicting that a no deal Brexit would lead to a minor recession in the UK economy.

We have Australian CPI on the docket today which will be of interest to AUD/NZD traders especially. ANZ business survey is also due whilst overnight we are graced with EUR CPI data. Key technical levels to consider for the NZD/USD are 0.6460 on the downside and 0.6620 on the topside.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7700 – 1.8000

The pound was the biggest underperformer on Tuesday, falling from 1.2810 to 1.2696, representing a 0.7% depreciation and its lowest level since mid-august. The risk of a no deal Brexit continues to hurt the domestic unit, with the overnight moves coming as ratings agency Standard & Poor noting overnight that the elevated risk of a no deal Brexit had accelerated enough to warrant it being considered in their ratings outlook for the UK economy. Markets were spooked by the agency forecasting a ‘modest recession’ if a no-deal Brexit came to fruition.

Tuesday’s weaker than expected GDP print out of the Eurozone was not enough for the Sterling to find support against the EUR, as the EUR/GBP cross rose from 0.8868 to touch intraday highs of 0.8938 before retreating slightly to consolidate around the 0.8925 handle. A strong performance from the Aussie dollar also saw AUD/GBP rise nearly 100 pips, touching highs of 0.5597.

As we have been alluding to all week, pound traders will be turning their attention to Thursday’s bank of England meeting. Whilst the central bank is expected to maintain their current monetary policy stance by keeping the cash rate on hold, the accompanying statement will be closely watched for any detail as to necessary conditions for a policy tightening scenario.

On the technical front, near term GBP/USD supports are evident it’s 2018 low of 1.2660 with any topside moves expected to meet resistance on approach to 1.2750.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7050 – 0.7150

The US Dollar rallied through trade on Tuesday enjoying a sustained period of support as solid US macroeconomic indicators help foster broader confidence in the world’s base currency. Consumer Confidence rose to an 18 year high in October, spurred by improving labour market conditions and gradual wage increases. The positive print supports Monday’s uptick in consumer spending and suggest near term consumer driven growth can continue through the short term. Advancing 4 tenths of a percent the Dollar index pushed through 97 to touch session highs at 97.02.

While we have seen the pace of the USD advance slow somewhat through the past month the underlying strength of the US economy when compared with its peers, the outlook for tighter monetary policy and the ongoing safe haven demand driven by emerging market concerns continues to add weight to a narrative of sustained USD upside. Of course we acknowledge there are risks to this outlook with the ill-effects of a protracted trade war and political uncertainty ahead of the November midterms weighing on future growth prospects. However, for now, with year end rebalancing only adding further support to the greenback we expect the USD will at least sustain current levels.

Attentions turn to ADP non-farm payroll numbers as a marker and snapshot of Friday’s NFP print.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6200 – 0.6300

The Euro depreciated through trade on Tuesday falling through 1.1350 amid ongoing US strength, lingering Italian fiscal woes and a softening growth outlook. Preliminary 3rd quarter GDP data failed to meet market expectations and offers a stark contrast to the robust growth enjoyed within the US. The Eurozone grew at just 0.2% between July and September, raising questions as to whether the ECB can begin raising interest rates in the Summer of 2019.

Touching intraday lows at 1.1351 the Euro continues to struggle in its bid to break outside broader ranges between 1.1330 and 1.1550.

Attentions now turn to inflation estimates as the headline item on the macroeconomic docket as another key marker guiding expectations for ECB policy.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9260 – 0.9350

The Loonie has consolidated overnight, trading between 1.31 and 1.3150 overnight against the Greenback. Movements were positive initially for the greenback as CB consumer confidence pushed the currency pair higher after an increase again for the month of October as business and labor markets improved.

The Canadian Dollar rallied higher after Bank of Canada Stephen Poloz was bullish in his remarks overnight as he said that the central bank will continue to hike interest rates to pull inflation back from recent highs of 3% in July.

Crude oil did not favours for the Loonie as it declined more than 1% overnight to $66 a barrel as price action remains volatile on increased supply in Russia and Saudi Arabia.

The USD/CAD opens this morning at 1.3110 as investors look towards the release of Canadian GDP figures this evening.

 

 

 

Posted by OFX

Trump predicts ‘great deal’ with China on trade

OFX Daily Market News

Posted by OFX

  United States Dollar

The United States Dollar Index is testing new highs at 96.91 not seen since mid-August. This price action follows US President Trump saying he expects a ‘great deal’ with China. The market is expected to be calmer today in comparison with yesterday’s trading session, where major equity markets had very high volatility following a Bloomberg story that Trump would announce tariffs on the remaining USD 257bn worth of Chinese imports.

In the economic calendar, the USD Consumer Confidence Index (OCT) is expected at 136 at 10:00 am later today. For the Greenback, the USD Change in Non-farm Payrolls (OCT) is expected at 193,000, and the USD Unemployment rate (Oct) is expected at 3.7% this Friday. Any significant difference with the actual numbers can imply higher volatility for the US dollar in its crosses.

The US index is expected to move close to the resistance of 96.98 seen in August and it is also expected to have a support of 96.60, depending on economic data.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.1300 – 1.1425

Empty Canadian economic data and relative thin US economic data seems unlikely to provide any meaningful catalyst in the USD/CAD pair. Furthermore, bearish traders of the Loonie are unaffected with weakness in oil prices.

The market will be waiting for the Gross Domestic Product in Canada announcement expected at 2.4% tomorrow at 8:30 am ET. Also, this Friday, November 2, the CAD Unemployment Rate (OCT) is expected at 5.9% and the CAD Net Change in Employment (OCT) is expected at 12,500.

From a technical perspective, the USD/CAD pair is currently trading at 1.3119. We continue to expect support to hold on moves approaching 1.3115 while now any upward push will likely meet resistance around 1.3200.

 

 

 

  Euro

EUR / USD Expected Range: 1.1300 – 1.1425

EUR/USD continues trading with a bearish pressure in the Tuesday session. Currently, the pair is trading at 1.1372, but it was down 0.23% on the day. On the release front, the economy in the eurozone continues to worry policymakers. Economic performance has softened in the third quarter, as Preliminary Flash GDP dipped to 0.2%, down from a 0.4% gain in the second quarter. On an annualized basis, Q3 growth was 1.7%, down from 2.2% in the second quarter. The reason for this slowdown can be attributed to the crisis over the Italian budget, which was rejected by the European Commission since it breached EU regulations over debt limits.

Furthermore, the economic calendar showed more data for the eurozone: the EUR German Unemployment Change in October at -11,000 vs -12,000 reading, the EUR German Unemployment Claims Rate in October at 5.1% vs 5.1% reading, and the EUR Italian Gross Domestic Product (YoY) (3Q P) at 0.8% vs 1.0%.

From a technical perspective, the EUR/USD pair is expected to trade between 1.1300 and 1.1425 in the next hours.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2740 – 1.2800

Choppy stock markets are not helping the Pound which usually has benefitted from positive risk sentiment, however, the main problems are complicated Brexit politics, which aren’t getting any easier. Beyond Brexit, the monetary policy offers another headwind; bets on Bank of England tightening by the end of 2019 have decreased according to a Bloomberg article.

In the economic calendar, this Thursday will be very interesting for the Cable. The forecasts are as follows: GBP Bank of England Bank Rate (NOV 1) at 0.75% and GBP BOE Asset Purchase Target (NOV) at 435 billion. There will also be the GBP Bank of England Inflation Report and Carney will speak at the press conference in London.

From a technical perspective, the cable might move in a range of 1.2740 and 1.2800 in the next hours.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7051 – 0.7160

The Housing Industry Association New Home Sales showed an increase of 1.1% in September, a positive number after seeing a decline in the past two months. The release of Building Approvals were at 3.3% vs. 3.8% (MoM) and -14.1% vs. -9% (YoY) last night.

Tonight, the 3rd quarter of the AUD Consumer Prices Index will be released. Westpac remains of the view that Wednesday’s 3Q CPI print is unlikely to shift market expectations of RBA policy significantly. They expect both headline and core inflation to remain at or below the bottom of the target band. Also, a surprise to the downside for inflation, as it will have little bearing on market pricing, but an upside surprise will be potentially significant. Westpac sees RBA remaining on hold throughout the remainder of 2018, during 2019 and in 2020

From a technical perspective, the AUD/USD pair is currently trading at 0.7114. We continue to expect support to hold on and the pair to approach 0.7051, while any upward push will likely meet resistance at around 0.7160.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6515 – 0.6569

The New Zealand Dollar is stronger this morning when valued against the U.S. Dollar on the back of an ongoing China-US economic spat that is continuing to fester. The NZD/USD reached an overnight high of 0.6559.

On the data front this week in New Zealand, there is not much of note, with building permits (MoM), business confidence, and activity outlook statistics being released tonight, followed by consumer confidence statistics on Thursday.

From a technical perspective, the NZD/USD pair is currently trading at 0.6550. We continue to expect support to hold on and the pair to approach 0.6515, while any upward push will likely meet resistance at around 0.6569.

 

 

 

Posted by OFX

Australian Dollar continues to trade in bearish channel

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar position moved initially higher to start of the week and saw intraday highs of 0.7107. Unable though to push through key resistance levels with profit takers hit the market, the Australian dollar traded lower into the sideways channel the AUD/USD has sat within since the start of October.

The Housing Industry Association New Home Sales showed an increase of 1.1% for the month of September, a positive number after seeing a decline in the past two months.

The Aussie settled in familiar territory lower as it once again looks to test support levels at 0.7050 after upbeat United States consumer spending rose for the seventh straight month pushed the greenback higher. This morning sees the release of Building Approvals along with a speech by RBA Assistant Governor (Financial System) Michele Bullock at the CBA Markets conference in Sydney.

The Australian Dollar opening this morning at 0.7053.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0730 – 1.0980

The New Zealand Dollar is slightly stronger this morning when valued against the U.S. Dollar on the back of ongoing China-US economic spat continuing to fester. The NZD/USD reached an overnight high of 0.6554.

On the data front this week in New Zealand it is very quiet with Building Consents on Wednesday followed by business and consumer confidence stats on Wednesday and Thursday. There are no scheduled releases in New Zealand today.

From a technical perspective, the NZD/USD pair is currently trading at 0.6521. We continue to expect support to hold on moves approaching 0.6501 while now any upward push will likely meet resistance around 0.6582.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7975 – 1.8440

The pound is slightly lower this morning when valued against the greenback. It traded in a relatively tight range, oscillation between 1.2826 and 1.2791 before consolidating around key support at 1.2800 heading into the Sydney session. Much of the overnight focus was on Angela Merkel’s declaration, overshadowing the UK government’s budget announcement which saw UK chancellor Phillip Hammond outline the UK’s plan to end austerity.

The announcement was a non-event for currency markets as developments were largely in line with leaked information over the past few weeks. The budget took advantage of upward revisions in growth forecasts, proposing these be spent rather than saved, including additional funding boosts for welfare initiatives and housing and infrastructure investment. It must be noted that these plans are largely conditional on an orderly Brexit, with the bulk of the decisions regarding how these moves will be funded left until after the Brexit decision, effectively adopting a ‘wait and see’ mentality.

With the budget announcement now behind us, traders will be looking towards Thursday’s Bank of England monetary policy decision, however given the ongoing Brexit uncertainty we do not anticipate there will be much change in the central bank’s policy outlook. Particular emphasis will be placed on any revisions to growth projections which could engender some price action.

Recent moves mean any sterling weakness could see the cable test 2-month lows of 1.2777 which were released last week. In terms of key technical levels to consider, we see the GBP/USD as being relatively well supported around the 1.2774 handle, whilst we expect any upside moves to meet technical resistance at levels nearer to 1.2830.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7030 – 0.7150

The USD edged upward through trade on Monday as robust consumer spending and Euro nervousness helped bolster demand for the world’s base currency. The dollar index edge up a quarter percent pausing marginally below 10 week highs. Consumer spending rose in September, marking the seventh consecutive month of increased shopping frivolity. Further support came on the back of news German Chancellor Angela Merkel would not seek re-election as party chairwoman. Considered the Iron Lady of Europe her departure from European politics only heightens broader political instability. The Euro slipped some 0.14% against the dollar, falling back through 1.14 to touch intraday lows at 1.1364.

Despite a softening in recent upside moves we expect continuing macroeconomic strength and haven support will underpin the dollar. However, increasing capital market volatility, wavering corporate earnings and questions surrounding the policy impact of the upcoming November midterms continue to weigh on broader dollar value adding to recent range bound trading as investors appear reluctant to extend bullish or bearish moves.

Attentions today turn to consumer sentiment data and ongoing US-China trade war developments for direction through trade on Tuesday.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6130 – 0.6280

The Euro fell against most major counterparts on Monday following reports German Chancellor Angela Merkel would not stand for party re-election at the end of her current tenure. In what was perhaps a knee jerk reaction, markets pushed the 19 nation combined unit below 1.14 to touch intraday lows at 1.1364. Merkel, considered the leader of Europe has been a stalwart in driving European unity through the last 13 years and her departure only adds to the narrative of instability that is European politics.

While the immediate impact will perhaps be short lived, recent swings in key German regional elections coupled with Merkel’s departure raise questions over the future of German politics. Should a social and political swing within Germany raise questions over the resolve of Europe’s largest economy to support periphery states we could witness a sustained period of ongoing Euro weakness.

Attentions today turn to further political developments as Italy continues it tete-a-tete with Brussels, while Prelim GDP data drive macroeconomic direction.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9180 – 0.9320

The Canadian dollar pulled off from Fridays stronger close as greenback strength and a decline in oil prices was the main catalyst for the damage. The USD/CAD position rallied from 1.3080 on open to key resistance lines around 1.3150.

Oil futures were down nearly one percent and trading just a tick over $67 a barrel as Russia suggested supply will remain high as U.S. sanctions on Iran exports look to put pressure on supply in a weeks’ time.

Next moves for the Loonie will be underpinned by Bank of Canadas Governor speech at the House of Comms Standing Committee on Finance this evening. Market participants will be eager to see if there will be any change to rhetoric around potential further interest rate rises after raising rates last week to 1.75%

From a technical perspective, the USD/CAD pair is currently trading at 1.3130.

 

 

 

Posted by OFX

The United States Dollar Index is still trading towards a 10-week high

OFX Daily Market News

Posted by OFX

  United States Dollar

The United States Dollar Index tested highs at 96.67 on Monday. The index was gathering strength following fresh concerns around EUR from the German political scenario, where German Chancellor Merkel’s governing coalition suffered heavy losses in a regional election in the state of Hesse on Sunday.

The US Dollar rose towards a 10-week high on Monday as concerns about global growth continue. On top of that, the tariff negotiations between the United States and China have also lifted the dollar. The market has assumed that while the US economy will be hit by reduced trade, it will be hurt less than its trading partners.

In the economic calendar, the USD Personal Consumption Expenditure Core (YoY) September at 2.0% vs 2.0% reading, the USD Personal Income (September) at 0.2% vs 0.4% and the USD Personal Spending (September) at 0.4% vs 0.4% reading, are helping to keep the bid in the US Dollar, as long as there is a continuation of strong U.S. data.

We see US Dollar Index is well supported at the 96.29 level in the near term while topside moves are expected to meet resistance at the 96.80.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3070 – 1.3150

The USD/CAD continues giving up gains after the US core Personal Income and US Personal Spending numbers in the USA.

Crude oil futures were slightly lower in the European morning session Monday as weaker global growth prospects hung over the market. There were concerns that could cap the bounce in the resource-linked Loonie.

The bigger drivers for CAD weakness these days continue being a lower oil and general global risk aversion.

Tomorrow, Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will appear for House of Commons Standing Committee on Finance in Ottawa at 15:30 ET.

Recent moves imply new technical levels to consider. On the downside, we see USD/CAD being relatively well supported at the 1.3070 level in the near term while topside moves are expected to meet resistance at the 1.3150.

 

 

 

  Euro

EUR / USD Expected Range: 1.1350 – 1.1425

The Euro continues having a bumpy ride against the Greenback. The EUR/USD has posted slight losses in the Monday session. Currently, the pair is trading at 1.1377, down 0.23% on the day.

Italian politics continue to weigh on the euro with EUR/USD trading below the 1.14 handle. The EU Commissions latest economic forecasts are released tomorrow with a revision downwards of growth likely to be seen. The ongoing Italian budget dispute has hit the euro hard of late with the extra downward pressure exerted by credit agency Standard and Poor’s decision on Friday to lower its outlook for the country to negative from stable. The shared currency is unlikely to rise as long as the impasse continues and with PMI numbers showing a slowdown in output, the euro will likely be capped for the foreseeable future.

The Euro was marginally affected over the weekend. A key regional election in the German state of Hesse, which includes the population-heavy city of Frankfurt, saw Chancellor Angela Merkel’s CDU/CSU coalition suffer extreme losses in voter confidence, narrowly escaping defeat and sending a warning shot across the bow of Merkel allies that the populace is growing tired of political in-fighting and disenfranchised with the lack of policy results. This affected the Euro negatively as well starting the week.

We continue to expect support to hold on moves approaching 1.1350, while now any upward push will likely meet resistance around 1.1425.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2800 – 1.2850

Sterling remains depressed this morning as Brexit sentiment continues to weigh on the pound. Chancellor of the Exchequer, Philip Hammond is due to deliver his budget this afternoon with speculation that an end to austerity will be indicated. Whatever Hammond says is unlikely to move the pound dramatically as its direction is currently dictated by Brexit related news. Looking ahead we have the Bank of England’s quarterly Inflation Report on Thursday with growth and CPI expectations likely to be the main talking points. GBP/USD continues to trade around the 1.28 handle.

We continue to expect support to hold on moves approaching 1.2800, while now any upward push will likely meet resistance around 1.2850.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7055 – 0.7105

The Australian Dollar was put under pressure on Friday. After opening at 0.7095 against the Greenback, the Aussie saw movements lower through the Asian trade following speculation that the People’s Bank of China had intervened in currency markets to support the Yuan. China is apparently prepared to use as much currency reserves as possible to ensure the Yuan does not fall through 7 yuan per dollar.

The United States Advanced GDP release pulled back to 3.5 percent in the third quarter from the previous reading of 4.2%, with markets disappointed by poor business investment levels to see the Greenback sold off by the weekend.

This morning the Aussie is moving lower, just below the US 71 cent handle. This week looks to be busy on the economic agenda with a focus on the release of Inflation figures domestically for the third quarter of 2018.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6515 – 0.6555

The New Zealand Dollar is stronger this morning when valued against the U.S. Dollar on the back of US Q3 GDP data report which focused on the poor reading for business investment raising some doubt about the sustainability of growth moving forward. US Q3 GDP for the three months to September came in at 3.5%, above the 3.3% expected.

On the data front this week in New Zealand it is very quiet with the only two releases scheduled Building Consents on Tuesday and ANZ Business Confidence on Friday. There are no scheduled releases in New Zealand today.

From a technical perspective, the NZD/USD pair is currently trading at 0.6530. We continue to expect support to hold on moves approaching 0.6500 while now any upward push will likely meet resistance around 0.6560.

 

 

 

Posted by OFX

Australian dollar holds following a dip below 70.50 US cents

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar was put under pressure on Friday to see multi year lows after crumbling below critical support levels of 0.7050. After opening at 0.7080 against the Greenback, the Aussie saw steady movements lower through the Asian trade following speculation that the People’s Bank of China had intervened in currency markets to support the Yuan. China is apparently prepared to use as much currency reserves as possible to ensure the Yuan does not fall through 7 yuan per dollar.

At the close of the local session, intraday lows hit 0.7025 in a risk off environment as equities continues to suffer losses in both Australia and abroad.

The United States Advanced GDP release pulled back to 3.5 percent in the third quarter from the previous reading of 4.2% , with markets disappointed by poor business investment levels to see the Greenback sold off by week end.

This pulled the Aussie higher from 0.7030 to close the week again just below the US 71 cent handle. This week looks to be busy on the economic agenda with a focus on the release of Inflation figures domestically for the third quarter of 2018.

This morning sees the release of HIA New Home Sales for the month as the Australian Dollar opens this morning at 0.7093.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0780 – 1.0980

The New Zealand Dollar is stronger this morning when valued against the U.S. Dollar on the back of US Q3 GDP data report which focused on the poor reading for business investment raising some doubt about the sustainability of growth moving forward. US Q3 GDP for the three months to September came in at 3.5%, above the 3.3% expected.

On the data front this week in New Zealand it is very quiet with the only two releases scheduled Building Consents on Tuesday and ANZ Business Confidence on Friday. There are no scheduled releases in New Zealand today.

From a technical perspective, the EUR/USD pair is currently trading at 0.6522. We continue to expect support to hold on moves approaching 0.6501 while now any upward push will likely meet resistance around 0.6582.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7975 – 1.8440

Ongoing concerns surrounding the possibility of a no Brexit deal continue to weigh on the pound with the domestic unit remaining under downward pressure last week. GBP/USD opens roughly flat this morning hovering around the 1.2820 level heading into a week which delivers a number of key risk events for the pound. We have a UK budget release due out on Monday, followed by the Bank of England meeting and inflation report for November on Thursday. Despite this, there is no hiding from the Brexit situation, with broader risk sentiment and Brexit headlines likely to continue to dominate price action for the pound.

Focusing on Monday’s budget releases, markets will be eager to understand whether Prime Minister Theresa May’s promise of ‘an end to austerity’ and her commitments to meeting existing fiscal targets are still attainable in light of the Brexit uncertainties. Thursday’s BOE meeting is also likely to see the monetary policy committee retain their ‘gradual and limit’ rhetoric by keeping a hold on the cash rate however it will be interesting to see how the contradicting macroeconomic signals emanating from the domestic economy will; be interpreted by the central bank. A rate hike is generally not expected before May 2019.

We’re expecting the GBP/USD pair to trade between 1.2650 and 1.2960 throughout the next week, however we do see key technical resistance at 1.2865 on the topside, whilst on the downside immediate support is evident at levels nearer to 1.2810 followed by 1.2775.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7030 – 0.7150

The US dollar enjoyed mixed fortunes through trade on Friday giving up two-month highs on increasing concerns US earnings are beginning to show signs the protracted long run cycle is coming to an end. The Dollar found support early following a stronger than anticipated GDP print. An uptick in consumer spending and inventory investment offset the drop-in tariff plagued exports, ensuring the slowdown in growth was not nearly as dramatic as first anticipated. Despite the strong headline GDP print and a slow down in inflation that may give the Fed reason to pause its rate hiking cycle the Dollar fell across the board into the close.

Investors were reluctant to extend the recent upside as the adverse effects of tariffs on US earning, increasing borrowing costs and political tensions are beginning to weigh on broader optimism. The Dollar index fell almost six tenths of a percent, while the Euro pushed through 1.14 and the Yen made early gains as risk appetite waned.

Attentions now turn to a slew of macroeconomic indicators headlined by Tuesday’s Consumer confidence report and Fridays Non-Farm payroll print.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6130 – 0.6280

The Euro had what seemed to be a bumpy ride on Friday against the Greenback. Having initially opened Friday’s Asian session around the 1.1374 area, the pair moved sideways until the European session began where the pair was dragged lower following European Central Bank President Mario Draghi’s failure to convince traders the ECB could pursue monetary tightening after next summer as political and economic uncertainties grow in the monetary union. Technical buyers came in to stop the price slide as the pair bounced off 1.1335 August 15 support levels. A slow grind back over 1.14 on the back of weak US Data and the Euro closed the week a shade higher at 1.1403 against the U.S Dollar.

In economic news, German GfK Consumer Climate released showed that consumers in Germany remain in a spending mood in spite of a recent dampening of the country’s macro-economic prospects. The consumer climate indicator forecasts the development of real private consumption in the following month with the barometer holding steady at 10.6 for November.

Looking ahead, the local calendar is light until tomorrow where the Euro zone is to publish preliminary GDP data and Germany is to release data on consumer price inflation.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9180 – 0.9380

The USD/CAD pulled back from its highest level since September the 11th following a disappointing GDP reading out of the United States for the third quarter. Intraday highs hit 1.3160 before strength in the Loonie was seen during North American sessions and traded as low as 1.3080 at one point.

WTI Crude Oil prices pulled off lows to over $67 a barrel in further support for the Commodity based currency, and is hoping the Loonie trades higher off the back of Bank of Canadas rate hike last week from 1.5% to 1.75% and the fifth hike since July 2017.

From a technical perspective, the USD/CAD pair is currently trading at 1.3095. We continue to expect support to hold on moves approaching 1.3020 while now any upward push will likely meet resistance around 1.3150.

 

 

 

Posted by OFX

The U.S economy expanded at a 3.5 percent pace in the third quarter, better than expectations

OFX Daily Market News

Posted by OFX

  United States Dollar

The United States Dollar appreciated again across the board in overnight trading, as risk-off environment continued to dominate market sentiment. The US Dollar Index futures are up hitting 96.62 overnight and increased around 0.13 percent.

Many sources drove momentum, chief among them was the equity market. The S&P500 is on track for its 13th negative day out of 15 and is 8% lower than its late-September high. The catalysts for the falls are numerous and varied. However, the general sentiment is that there will be tighter future global growth. US-China tensions and softer earnings reports aren’t helping either. The falls in equity markets spearheading a general flight to safety across financial markets with the Greenback being a prime beneficiary of the shift in asset allocations.

US growth differentials vs. other G20 countries remain high, and the Fed is deliberating the merits of hiking beyond the neutral rate into a restrictive territory, which is not priced.

Moving into Friday, the economic calendar still interesting with USD Gross Domestic Product Annualized (QoQ) (3Q A) at 3.5% vs. consensus of 3.3%, USD Gross Domestic Product Price Index (3Q A) at 1.7% vs. 2.1%. USD Personal Consumption (3Q A) at 4.0% vs 3.3%. Later this morning we will have Pending Home Sales. FOMC Member speeches today come from Clarida and Mester are 12:15 pm and 5:30 pm EST respectively.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3130 – 1.3150

The loonie has given up the gains seen after the Bank of Canada raised interest rates on Wednesday. BoC head, Stephen Poloz stated that Canada was approaching a level of neutral interest rates and removed the word “gradual” from the statement when referring to the expected pace of tightening. However, the risk-off environment since then has seen USD/CAD push back up through 1.3100 handle.

Second-tier data out of the domestic economy on Thursday saw Canadian average weekly earnings (nonfarm) rise by 2.9% on a yearly basis in August while oil prices rebounded allowing the US crude price to rise 0.8% touching $67.35.

Recent moves imply new technical levels to consider. On the downside, we see USD/CAD being relatively well supported at the 1.3029 level in the near term while topside moves are expected to meet resistance at the 1.3157.

 

 

 

  Euro

EUR / USD Expected Range: 1.1335 – 1.1375

The Euro is weaker this morning when valued against the U.S. Dollar falling to a fresh low of 1.1335 following the European Central Bank monetary policy’ meeting the risk of a no-deal UK departure from the European Union. European Central Bank President Mario Draghi said on Thursday the longer Brexit talks drag on, the more the private sector will have to prepare for the possibility of Britain crashing out without a deal.

On the data front yesterday, we saw the release Germany business confidence survey which slipped to 102.8 from 103.8 the previous month amid growing concerns about trade disputes and other economic issues. Looking ahead today and the macroeconomic calendar in the EU with all eyes on the US release of the first estimate of Q3 GDP, foreseen at 3.3% vs. the final Q2 4.2% reading.

From a technical perspective, the EUR/USD pair is currently trading at 1.1353. We continue to expect support to hold on moves approaching 1.1331 while now any upward push will likely meet resistance around 1.1400.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2800 – 1.2230

The Great British Pound throughout the Asian session on Thursday remained under pressure and stayed below the 1.3000 handle vs. the Greenback on the back of renewed US Dollar buying interest. The safe-haven U.S dollar has attracted nervous investors, due to increased geopolitical tensions including U.S and China, the outcry over the killing of a Saudi journalist in Turkey and the increasing tension between Putin and the United States. Washington has said it wanted to withdraw from a key nuclear weapons control treaty with Russia since it was confident Moscow had violated it.

In the early North American session news broke via Bloomberg that “Brexit talks are said to be on hold as May’s team can’t agree.” In a knee-jerk reaction the cable was sold off further and touched an eventual low of 1.2810. Britain departs the EU at the end of March, and the uncertainty surrounding Brexit is likely to continue to weigh on the pound

Earlier today, there was no local data releases, therefore, investors will likely look offshore for direction with the upcoming US GDP figures due for release. The numbers are expected to be robust which could put further pressure on the Sterling.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7040 – 0.7085

The Australian Dollar is higher overnight after opening the morning at 70.45 US cents. With the focus squared on equities this week, tech shares drove markets higher as the Nasdaq rebounded aggressively in trade yesterday, pulling risk sentiment with it.

The Aussie has fallen away this morning as global equity markets dip on risk-off sentiment. USD/CNY is close to breaking through 7.0 for the first time in 10 years despite assurances from the Peoples Bank of China that it isn’t deliberately devaluing its currency. Chuck into the mix the ping pong being seen between the Italian coalition and the European Commission over its proposed budget and you get a capped Aussie. Next Tuesday night’s CPI data from Australia is the next big domestic event of note that will move the local buck. AUD/USD is down to .70445 and GBP/AUD sits at 1.82.

With a lack of domestic data this week, investors look towards the release of United States Advanced GDP for Q3 which seems to be the highlight of the evening. The Australian dollar opens this morning at 0.7080.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6475 – 0.6500

The New Zealand Dollar remains largely range-bound through trade on Thursday, bouncing between intraday lows at 0.6502 and session highs at 0.6545. Despite ongoing equity market volatility and a far from encouraging trade balance print the NZD remains stubbornly resilient. While the trade deficit continues to widen on surging imports and current prices pressures on milk and milk powder (New Zealand’s Primary export) the growth outlook remains solid and investors are far from panic stations.

The NZD remains well bid on moves approaching 0.65 and 0.6450 and appears to have fought off any deeper correction for the time being. That said, much like its antipodean counterpart, there remains little appetite to significantly extend upside moves with drives toward 0.6550 and 0.66 likely to meet selling pressure as investors look to take profits.

While equity driven risk appetite will guide broader demand for the Kiwi, attentions now turn offshore as US GDP and Consumer sentiment data drive directly into the weekly close.

 

 

 

Posted by OFX

Australian dollar maintains narrow range

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar is higher overnight after opening the morning clinging onto support at 70.60 US cents. With the focus squared on equities this week, tech shares drove markets higher as the Nasdaq rebounded aggressively in trade overnight, pulling risk sentiment with it.

Futures on the SPI200 point towards a 1% increase on open as we saw the AUD/USD peak just below the 71 US cent handle in North American trade, a level unable to be breached this week as a narrow sideways pattern emerges between 0.7050 and 0.7100.

With a lack of domestic data this week, investors look towards the release of United States Advanced GDP for Q3 which looks to be the highlight of the evening. The Australian dollar opens this morning at 0.7080.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0730 – 1.0930

The New Zealand Dollar remains largely range bound through trade on Thursday, bouncing between intraday lows at 0.6502 and session highs at 0.6545. Despite ongoing equity market volatility and a far from encouraging trade balance print the NZD remains stubbornly resilient. While the trade deficit continues to widen on surging imports and ongoing prices pressures on milk and milk powder (new Zealand’s Primary export) the growth outlook remains solid and investors are far from panic stations.

The NZD remains well bid on moves approaching 0.65 and 0.6450 and appears to have fought off any deeper correction for the time being. That said, much like its antipodean counterpart, there remains little appetite to significantly extend upside moves with drives toward 0.6550 and 0.66 likely to meet selling pressure as investors look to take profits.

While equity driven risk appetite will guide broader demand for the Kiwi, attentions now turn offshore as US GDP and Consumer sentiment data drive direction into the weekly close.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7975 – 1.8475

The Great British Pound throughout the Asian session on Thursday remained under pressure and stayed below the 1.3 handle vs the Greenback on the back of renewed US Dollar buying interest. The safe-haven U.S dollar has attracted nervous investors, due to increasing geopolitical tensions including U.S and China, the outcry over the killing of a Saudi journalist in Turkey and the increasing tension between Putin and the United States. Washington has said it wanted to withdraw from a key nuclear weapons control treaty with Russia since it was confident Moscow has violated it.

In the early North American session news broke via Bloomberg that “Brexit talks are said to be on hold as May’s team can’t agree”. In a knee jerk reaction the cable was sold off further and touched an eventual low of 1.2810. Britain departs the EU at the end of March, and the uncertainty surrounding Brexit is likely to continue to weigh on the pound.

Looking ahead, there are no local data releases thereofre invetors will likely look offhsore for direction with the upcoming US GDP figures due for release. The numbers are expected to be solid which could put further pressue on the Sterling.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7030 – 0.7150

The United States Dollar remains relatively range-bound in overnight trading, appreciating a marginal 0.27% to 96.6 on the US Dollar Index. In what has proven to be a lacklustre economic calendar, the themes of the week continued to play a part on Thursday trading with volatility in equity markets affecting market sentiment in a number of financial markets.

The economic calendar did have some release’ of note however with month on month core durable goods orders posted overnight. The result was ultimately poorer than expected however which didn’t help the Greenbacks case. Despite the setback, the USD did find some support from the new vice-chair of the Federal Reserve Richard Clarida who gave his first speech yesterday. Tellingly, he gave a fairly upbeat view of the US economy and noted that “some further gradual adjustment in the policy rate range will likely be appropriate”.

The Greenback was also well supported by volatility in equity and bond markets with both appreciating overnight. Earnings from some big tech stocks such as Twitter, Microsoft and Tesla led the S&P500 to rally. Nevertheless the overall trading environment remains volatile which saw the US Dollar well bid.

Moving into Friday the Greenback turns to advanced quarter on quarter GDP figures for direction and will keep a close eye on equity markets.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6130 – 0.6280

The Euro is weaker this morning when valued against the U.S. Dollar falling to a fresh low of 1.1355 following the European Central Bank monetary policy’ meeting the risk of a no-deal UK departure from the European Union. European Central Bank President Mario Draghi said on Thursday the longer Brexit talks drag on, the more the private sector will have to prepare for the possibility of Britain crashing out without a deal.

On the data front yesterday we saw the release Germany business confidence survey which slipped to 105.9 from 106.6 the previous month amid growing concerns about trade disputes and other economic issues. Looking ahead today and the macroeconomic calendar in the EU with all eyes on the US release of the first estimate of Q3 GDP, foreseen at 3.3% vs. the final Q2 4.2% reading.

From a technical perspective, the EUR/USD pair is currently trading at 1.1373. We continue to expect support to hold on moves approaching 1.1340 while now any upward push will likely meet resistance around 1.1400.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9180 – 0.9380

The Loonie retreated against the greenback overnight, giving up a portion Thursdays rate hike induced gains. USD/CAD traded between 1.3015 and 13096 and we open this morning Sydney time at 1.3073 heading into the Friday session.

Second tier data out of the domestic economy on Thursday saw Canadian average weekly earnings (nonfarm) rise by 2.9% on a yearly basis in August whilst oil prices rebounded allowing the US crude price to rise 0.8% touching $67.35.

Recent moves imply new technical levels to consider. On the downside, we see USD/CAD being relatively well supported at the 1.3000 level in the near term whilst topside moves are expected to meet resistance at the 1.3150 handle.

 

 

 

Posted by OFX

The Dollar Index Moves Higher as Equities Fall and Global Growth Concerns

OFX Daily Market News

Posted by OFX

  United States Dollar

The United States Dollar appreciated across the board in overnight trading, as risk aversion continued to dominate market sentiment. The US Dollar Index (DXY) reflected the strengthening Greenback and increased by half a percent to hit 96.43.

Many sources drove momentum, chief among them was the equity market. The S&P500 is on track for its 13th negative day out of 15 and is 8% lower than its late-September high. The catalysts for the falls are numerous and varied. However, the general sentiment is that there will be tighter future global growth. US-China tensions and softer earnings reports aren’t helping either. The falls in equity markets spearheading a general flight to safety across financial markets with the Greenback being a prime beneficiary of the shift in asset allocations.

Moving into Thursday, the economic calendar is a little more interesting with M/M Core Durable Goods Orders printing above expectations at 0.8% vs consensus of -0.9%, Durable Goods Orders ex Transportation missed at 0.1% vs 0.3%. Initial Jobless Claims rose slightly to 215k while Continuing Jobless Claims dropped to 1.636M from last week’s reading of 1.641M. Later this morning we will have Pending Home Sales. FOMC Member speeches today come from Clarida and Mester are 12:15 pm and 5:30 pm EST respectively.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3029 – 1.3114

Big session for the CAD overnight, hitting weekly highs against the greenback after the Bank of Canada signaled a faster pace of monetary policy tightening. The BOC raised the cash rate by 25bp to 1.75% which was of no surprise to markets who had fully priced this in. The accompanying statement triggered the rally in the loonie, with the USD/CAD falling to 1.2969 (76.87 US Cents) representing its highest level since October 17. Greenback strength has clawed back some of the gains, with USD/CAD opening this morning at 1.3051.

The Bank of Canada hawkish undertone comes from the comment that even with its benchmark overnight rate at 1.75% interest rates remain “stimulative,” signaling to market participants more hikes to come. The Bank of Canada in their monitory policy report emphasized to participants that neutralized rates somewhere between 2.5% and 3.5%. The optimism comes from the recent renewed North American pact between the United States, Mexico, and Canada, citing “it will reduce an important source of uncertainty that has been holding back business investment.” Markets are currently pricing three further hikes for next year. Markets are presently pricing three further hikes for next year.

The Canadian economic calendar is light for the balance of the week. Therefore, the technical front for the USD/CAD sees resistance 1.3071 with any downside moves expected to meet first support approaching 1.3029 and second at 1.2987.

 

 

 

  Euro

EUR / USD Expected Range: 1.1375 – 1.1428

The Euro remains weak this morning when valued against the U.S. Dollar on the back of better-than-expected US data releases yesterday. In the EU Preliminary October Markit PMI came in well below expected, leaving the EU Composite PMI at 52.7, the slowest rate of growth in two years.

Today and the European Central Bank held its monetary policy meeting; investors will be looking for any comments about the ongoing concerns between the European Union and Italy over Rome’s budget. The macroeconomic calendar is light with only the release of Germany business confidence survey which missed at 102.8 vs previous of 103.7(IFO-Business Climate).

From a technical perspective, the EUR/USD pair is currently trading at 1.1422. We continue to expect support to hold on moves approaching 1.1395 while now any upward push will likely meet resistance around 1.1428.

 

 

 

  British Pound

GBP / USD Expected Range: 1.2878 – 1.2919

Unable to keep pace with a stronger Greenback overnight the Great British Pound has fallen when valued against the worlds reserve currency. The GBP/USD suffered a downward correction from 1.2983 as the European session began and dragged further through the North American session moving to a low of 1.2867 -down by 0.90%. The primary driver for the move was that investors seemed convinced that the UK PM Theresa May would not accept the proposal as she wants a UK-wide customs backstop to be legally binding and included in the divorce bills. Safe-haven buying came in play for the USD and pulled the GBP/USD to a three-week low.

In other news, British mortgage lending fell to a seven-month low in September, a month after the Bank of England raised interest rates. Approved mortgages were down to 37,352 from 42,581 in August according to figures from UK Finance. It seems that there is some apparent pressure on consumers regarding affordability and we as the uncertainty over the impact Brexit will have on the economy.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7057 – 0.7095

The Australian Dollar saw an all too familiar story overnight after it failed in its attempts to break through resistance at 71 US cents at the local close yesterday. Opening the morning at 0.7085, upside momentum in the afternoon on improved sentiment in Asia saw a shakeout of sellers before peaking at 0.7105.

Unable to breach strong resistance lines, the Australian Dollar resumed its broader trend lower overnight following heavy losses on equity markets with investors retreating into safe-haven currencies. With the ASX expected to open at least 1.5% lower the Australian dollar is likely to once again look to test key support levels at 0.7050 today. With the Australian dollar opening this morning at 0.7060, cues will once again take its lead from equity markets and a number of data releases in the United States today.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6503 – 0.6537

The New Zealand dollar is slightly lower against the US Dollar as jittery investors demands have increased for safe-haven buying. The New Zealand Dollar moved from highs of 0.6567 just before the European session down to a low of 0.6518 during the North American session. As the US-China trade war rages on with 10% tariffs that the US imposed on $200bn in Chinese goods will increase to 25% as of Jan 1st the Kiwi has been one of the sensitive G-10 currencies.

On the technical front support sits at 0.6500 followed by 0.6475, on the upside resistance sits at 0.6550 and 0.6565

 

 

 

Posted by OFX

AUD lower in equity rout

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar saw an all too familiar story overnight after it failed in its attempts to break through resistance at 71 US cents at the local close yesterday. Opening the morning at 0.7085, upside momentum in the afternoon on improved sentiment in Asia saw a shakeout of sellers before peaking at 0.7105.

Unable to breach strong resistance lines, the Australian Dollar resumed its broader trend lower overnight following heavy losses on equity markets with investors retreating into safe haven currencies. With the ASX expected to open at least 1.5% lower the Australian dollar is likely to once again look to test key support levels at 0.7050 today.
With the Australian dollar opening this morning at 0.7060, cues will once again take its lead from equity markets and a number of data releases in the United States this evening.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0800– 1.0900

The New Zealand is slight lower against the US Dollar as jittery investors demands have increased for safe-haven buying. The New Zealand Dollar moved from highs of 0.6567 just before the European session down to a low of 0.6518 during the North American session. As the US China trade war rages on with 10% tariffs that the US imposed on $200bn in Chinese goods will increase to 25% as of Jan 1st the Kiwi has been one of the sensitive G-10 currencies.

Looking ahead we see the release of Trade Data where a deficit has been forecasted at around $5bn mark as import growth remains ahead of exports.

On the technical front support sits at 0.6500 followed by 0.6475, on the upside resistance sits at 0.6550 and 0.6565

 

 

 

  British Pound

GBP / AUD Expected Range: 1.8100 – 1.8400

Unable to keep pace with a stronger Greenback overnight the Great British Pound has fallen when valued against the worlds reserve currency. The GBP/USD suffered a downward correction from 1.2983 as the European session began and dragged further through the North American session moving to a low of 1.2867 -down by 0.90%. The main driver for the move was that investors seemed convinced that the UK PM Theresa May will not accept the proposal as she wants a UK-wide customs backstop to be legally binding and included in the divorce bills. Safe-haven buying came in play for the USD and pulled the GBP/USD to a three-week low.

In other news, British mortgage lending fell to a seven-month low in September, a month after the Bank of England raised interest rates. Approved mortgages were down to 37,352 from 42,581 in August according to figures from UK Finance. It seems that there is some apparent pressure on consumers regarding affordability and we as the uncertainty over the impact Brexit will have on the economy.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7000 – 0.7100

The United States Dollar appreciated across the board in overnight trading, as risk aversion continued to dominate market sentiment. The US Dollar Index (DXY) reflected the strengthening Greenback and increased by half a percent to hit 96.43.

Momentum was driven by a number of sources, chief among them was the equity market. The S&P500 is on track for its 13th negative day out of 15 and is 8% lower than its late-September high. The catalysts for the falls are numerous and varied however the general sentiment is that there will be tighter future global growth. US-China tensions and softer earnings reports aren’t helping either. The falls in equity markets spearheading a general flight to safety across financial markets with the Greenback being a prime beneficiary of the shift in asset allocations.

On the domestic front, US new home sales came in softer than expected and fell to a 2-year low. While the recent hurricanes are undoubtedly to blame for a portion of the result the 7-year high in mortgage rates may also be playing a part. US Markit PMI figures were also released overnight and surprised to the upside.

Moving into Thursday the economic calendar is a little more interesting with M/M Core Durable Goods Orders due for release and the FOMC’s Brainard set to speak.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6150 – 0.6230

The Euro is weaker this morning when valued against the U.S. Dollar on the back of better-than-expected US data releases. In the EU Preliminary October Markit PMI came in well below expected, leaving the EU Composite PMI at 52.7, the slowest rate of growth in two years.

Looking ahead today and the European Central Bank holds its monetary policy meeting, investors will be looking for any comments about the ongoing concerns between the European Union and Italy over Rome’s budget. The macroeconomic calendar is light with the only release Germany business confidence survey (German GfK Consumer Climate).

From a technical perspective, the EUR/USD pair is currently trading at 1.1395. We continue to expect support to hold on moves approaching 1.1375 while now any upward push will likely meet resistance around 1.1430.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9170 – 0.9280

Big session for the CAD overnight, hitting weekly highs against the greenback after the Bank of Canada signaled a faster pace of monetary policy tightening. The BOC raised the cash rate by 25bp to 1.75% which was of no surprise to markets who had fully priced this in. The accompanying statement triggered the rally in the Loonie, with the USD/CAD falling to 1.2969 (76.87 US Cents) representing its highest level since October 17. Greenback strength has clawed back some of the gains, with USD/CAD opening this morning at 1.3000, a 0.6% decline on the day.

Focusing on the monetary policy statement, markets interpreted this as a definitely hawkish tone with the BOC dropping it’s referenced to a “Gradual approach” to future rate hikes. They have seemingly replaced this with a ‘neutral stance’, meaning the pace of further hikes will be dependent on how the domestic economy adjusts to the higher rates. They also pointed to the positive benefits of the USMCA deal, reducing trade policy uncertainty in the near term which was having a dampening effect on business confidence. Markets are currently pricing three further hikes for next year.

On the technical front, USD/CAD resistance can now be seen at 1.3083 with any downside moves expected to meet technical support on levels approaching 1.2950 and 1.2900 respectively.

 

 

 

Posted by OFX