Phase One of the U.S.-China Trade Agreement to be Signed in Washington Today.

OFX Daily Market News

Posted by OFX

USD – United States Dollar

The risk-on sentiment extended into Asia yesterday after the U.S. Treasury retracted its decision in August to designate China as a currency manipulator. The market mood has been given another lift with the imminent sign of the Phase One trade deal between the U.S. and China due to take place today in Washington.
Attention this morning is on the U.S. Producer Price Index released earlier today as investors prepare for a big week of U.S. domestic data points, headlined by PPI excluding food and energy released at 1.1 short of previous and consensus of 1.3 percent, respectively. Softness across these data points will affirm suggestions the U.S. economy is shifting nearer recession and subsequently increase the likelihood that monetary policy amendments will be required at some point through 2020.

Key Movers

The Great British Pound found support bouncing back through 1.30 as investors looked to mitigate recent losses. Sterling has come under increasing pressure since the December election as the focus shifts again towards Brexit and a stagnating domestic economy. As the likelihood of a rate cut looms, analysts have begun to reprice GBP, forcing it toward seven-week lows earlier this week. While we anticipate the Pound will remain under pressure through the coming months, our immediate attentions turn to today’s CPI inflation report and commentary from Bank of England and MPC policy member Michael Saunders for further direction. With other policy members already suggesting a rate cut is imminent, a poor inflation print and dovish commentary from Saunders could force the Pound lower still. Initial supports at 1.2950 remain in play with extended downside toward and through 1.29 and 1.2850 possible through the day if money markets amplify rate bet expectations.
The Yen advanced through trade overnight, recouping losses suffered through the end of last week as risk sentiment soured following reports the U.S. will not reduce tariff’s on China before the 2020 Presidential Election. The commentary has doused recent optimism that today’s signing of a Phase One trade deal would be the beginning of a full-scale de-escalation in trade tensions.

Expected Ranges

EUR/USD: 1.1118 – 1.1163 ▲

GBP/USD: 1.2984 – 1.3043 ▼

USD/CAD: 1.3045 – 1.3079 ▼

AUD/USD: 0.6876 – 0.6905 ▲

NZD/USD: 0.6583 – 0.6621 ▲


Posted by OFX

AUD consolidates after sluggish start to 2020

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The AUD edged marginally lower through trade on Monday slipping below 0.69 to touch intraday lows at 0.6895. Despite a broader uptick in risk sentiment the AUD struggled to mount any sustained upward momentum and remained largely range bound for much of the session. Having slipped 2% year to date and giving up approximately half of the gains enjoyed through December we expect a period of consolidation with support on moves approaching 0.6850 and 0.6820 as global uncertainties ease and the knee jerk reaction to the expected GDP impact of the devastating fire season abate.

With little of note on the domestic dockets our attentions this week turn to the signing of phase 1 in the US China trade deal, a significant marker and signal – when coupled with pending US currency report in which it is expected China will be removed as a currency manipulator – that tensions between the world’s economic superpowers have eased.

Key Movers

The USD edged upward through trade on Monday, recouping losses suffered in the wake of Friday’s disappointing labour market data and a decline in wage growth that fuelled expectations a Fed Rate cut will be proffered through the latter half of the year. Monday’s advances comes as investors prepare for a heavy week of domestic data points, headlined by CPI inflation data Tuesday and Core Retail Sales data Thursday. Softness across these data points will affirm suggestions the US economy is shifting nearer recession and subsequently increase the likelihood monetary policy amendments will be required at some point through 2020.

The Great British pound was the days worst performer Monday, falling half a percent and slipping further below 1.30 when valued against the USD. A raft of macroeconomic data sets showed the UK economy grew at its slowest pace in more than seven years and follows comments from the Bank of England that suggest a rate cut could be issued in the weeks ahead. As the likelihood of monetary policy corrections increases sterling will remain under pressure. Having already fallen 2% in the first two weeks of 2020 we will continue to monitor data points ahead of the January BoE meeting for any indication a rate hike is imminent.

Expected Ranges

AUD/USD: 0.6820 – 0.6950 ▼

AUD/EUR: 0.6130 – 0.6230 ▼

GBP/AUD: 1.8620 – 1.8990 ▼

AUD/NZD: 1.0370 – 1.0490 ▲

AUD/CAD: 0.8980 – 0.9050 ▼


Posted by OFX

The Greenback pares gains after December inflation numbers rose less than forecasted.

OFX Daily Market News

Posted by OFX

USD – United States Dollar

The Greenback pares its advance after U.S. consumer prices rose 0.2 percent in December, less than the 0.3 percent estimated, and after core prices came in at 0.1 percent in the same month versus the 0.2 expected. The EUR/USD pair trades 0.22 percent lower, the EUR/CAD pair trades 0.1 percent lower, and the EUR/AUD trades 0.12 percent lower. The USD/JPY pair is marginally higher, around 110.00, but it was at 110.08 before the CPI numbers were released.

The most important data gathered this morning was from Futures traders, who have increased the amount of easing they expect from the Federal Reserve after the release of inflation figures. For instance, according to Bloomberg, Fed fund futures for January 2021 imply a rate of 1.335 percent at the end of 2020, compared with the rate of 1.345 percent before the release of consumer-price inflation data. This means that market participants expect further easing for this year, by at least 25 basis points.

Yesterday, two key comments were made by two different Fed officials. Raphael Bostic, President of the Atlanta Fed, said the economy is doing fine, no reason for the Fed to either stimulate or slow activity, while Eric Rosengren, President of the Boston Fed, said the prospect for above-target inflation and financial asset bubbles pose a higher risk to economic outlook than downside threats from trade disputes and sluggish global growth. It is well-known that Rosengren is one of the few Fed officials biased towards raising rates, while Bostic is more centrist, just like Jay Powell. In summary, their speeches pushed the U.S. dollar lower in yesterday’s session.

The EUR/USD is erasing some loses at this moment trading at 1.1121 at the time of this writing.

Key Movers

The Australian dollar has been trading similarly to the Chinese Yuan over the last few months; however, the relationship is starting to fade away. As of today, the USD – Yuan currency pair is touching lows (strong Yuan), but the AUD/USD pair is trading in a pattern where it is reaching lower highs, which means that the Aussie dollar does not follow it anymore. Instead, bets that the RBA will restart easing of their monetary policy are increasing. At this moment, the AUD/USD trades at 0.6898.

Expected Ranges

USD/CAD: 1.3050 – 1.3083 ▲

EUR/USD: 1.1111 – 1.1137 ▼

GBP/USD: 1.2987 – 1.3055 ▲

AUD/USD: 0.6885 – 0.6916 ▲

NZD/USD: 0.6600 – 0.6637 ▼


Posted by OFX

AUD breaks 69 US cents

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The Aussie dollar rose steadily throughout Friday’s trading session to open at 0.6895 this morning, just coming down from breaking through the 0.6900 barrier. The initial momentum started as Retail Sales data in November showed an increase to 0.9%, beating out expectations of 0.4%.

This was propelled further owing to the weaker US dollar, after less than expected employment data, showing a change of only 145k employed people in the US last month, opposed to it’s forecast of 162k.

We continue to expect support to hold on moves approaching 0.6870 while any upward push will likely meet resistance around 0.6930.

Key Movers

As above, US Non-Farm employment data did not meet expectations, falling short of it’s forecast of 162k, with only 145k jobs created. Job creation is an important indicator of consumer spending, as it accounts for a majority of overall economic activity. The US unemployment rate held steady at 3.5%.

Over in Canada, the roles were reversed as employment change came back better than expected at 35.2k opposed to 24.9k, and their unemployment rate dropped from 5.6% from 5.9% last month.

In the future, we can expect to see some movement in these currency pairs with the release of the US CPI data just after midnight on Tuesday. Showing the change in the price of goods and services purchased by consumers, consumer prices account for a majority of overall inflation

Expected Ranges

AUD/CAD: 0.8920 – 0.9095 ▼

AUD/EUR: 0.6130 – 0.6290 ▼

GBP/AUD: 1.8690 – 1.8940 ▲

AUD/NZD: 1.0315 – 1.0460 ▼

AUD/USD: 0.6820 – 0.6975 ▲


Posted by OFX

The Greenback continues to bounce, helped by a weak Pound.

OFX Daily Market News

Posted by OFX

USD – United States Dollar

Without many economic releases today in the U.S. calendar, the Sterling’s weakness, which is sinking following dovish remarks by a BoE official (see key drivers section for more details), is a likely reason for the U.S. dollar index to increase 0.11 percent along with the Bloomberg U.S. dollar index rising by the same percentage.

The United States and China are expected to sign their phase one deal to end their tariff battle this week; these expectations are pushing the Chinese Yuan to new highs against the U.S. dollar from July 2019; it is currently trading at 6.8912 Yuan against the U.S. dollar. It also touched a six-month high (for the Yuan) at 6.8835.

Regarding key drivers for the U.S. dollar, Fed Bostic is going to discuss the economic outlook and monetary policy later today, and Fed Williams and Fed George are going to speak tomorrow. The cherry on top of the cake will be U.S. Federal Reserve Beige Book and Fed Harker’s discussion on economic outlook on Friday.

Key Movers

The BoC and ECB will release their decisions on monetary policy next week, on the 22nd and on the 23rd of this month, which will shed some light in the Pound and the Loonie. However, for now, the biggest loser this morning is the Pound, followed by the Japanese Yen.

The Sterling is falling today as weak GDP data added to the case of the BoE rate cut. Monthly GDP came in at -0.3 percent month to month versus the expected 0 percent. Furthermore, recent comments from BoE officials are suggesting that they’re open to easing if data don’t show improvement. BoE policymaker Gertjan Vlieghe said he would vote for an interest-rate cut this month if there are no signs of the economy improving. This Wednesday at 4:30, CPI numbers will be released in the U.K.

Regarding the Euro, there are two European Central Bank speeches scheduled for tomorrow by Yves Mersch in Frankfurt and François Villeroy in Paris.

Expected Ranges

USD/CAD: 1.3006 – 1.3066 ▼

EUR/USD: 1.1109 – 1.1134 ▲

GBP/USD: 1.2913 -1.3000 ▼

AUD/USD: 0.6869 – 0.6909 ▼

NZD/USD: 0.6610 – 0.6640 ▼


Posted by OFX

AUD dips amid mixed results from macroeconomic data releases

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The AUD held steady for the first half of the trading day session after ABS Trade Balance results of 5.80B beat expectations of 4.10B indicating that more goods and services were exported than imported for the last month. It saw a dip in the evening with the Chinese CPI data release which came in lower than expected at 4.5% compared to its forecast of 4.7%.

Just before midday the ABS will release their Retail Sales results. Showing the change in the total value of sales at the retail level, this is the earliest look at consumer spending data that accounts for the majority of overall economic activity.

The AUD opened at 0.6853 against the USD this morning.

Key Movers

Geopolitical tensions eased as US President Donald Trump signalled he will not retaliate for Iran’s missile strikes on Iraq bases housing US troops. Trump said that no Americans were harmed in these attacks, but the US will continue to look at options and look to “work together toward making a deal with Iran that makes the world a safer and more peaceful place”.

In terms of other macroeconomic news, Canada is scheduled to release their employment data just after midnight. Showing the change of number of employed people and total unemployed work force, job data is an important signal of overall economic health as consumer spending accounts for the majority of economic activity.

Expected Ranges

AUD/CAD: 0.8860 – 0.9020 ▼

AUD/EUR: 0.6105 – 0.6240 ▼

GBP/AUD: 1.8690 – 1.9305 ▲

AUD/NZD: 1.0250 – 1.0435 ▼

AUD/USD: 0.6785 – 0.6940 ▼


Posted by OFX

Employment data came in slightly weaker than expected; the U.S. dollar falls.

OFX Daily Market News

Posted by OFX

USD – United States Dollar

The Greenback was negatively affected by slightly weaker employment data. The EUR/USD pair has risen towards 1.1113 at the time of this writing. According to the U.S. Bureau of Labor Statistics, employment numbers in the U.S. ended last year with less positive momentum. Non-farm payrolls rose 145 K in December, the least since May. Furthermore, the unemployment rate came in at 3.5 percent as expected. While payroll numbers may be aligned with forecasts for continued moderation, wage numbers suggest that the labour market isn’t as stable as the unemployment rate shows. This is the first time their growth has fallen below 3 percent (average hourly earnings year to year came in at 2.9 percent) since 2018, and non-production workers (i.e., the average worker) weakened as well.

Despite payrolls coming in slightly weaker than expected, it might not be soft enough to raise the eyebrows of the Fed. This somewhat weak report will probably not change the Federal Reserve’s assessment that both the economy and monetary policy are in a “good place.” Fed Official Evans said yesterday from Milwaukee that the current rate (1.75 percent) well positions the U.S. economy to attain the desired 2 percent inflation figures. Furthermore, according to Evans, economic growth is expected between 2 to 2.25 percent in 2020.

Key Movers

Regarding the Eurozone, German industrial production rebounded in November after two months of decline. Still, a rebound for the German industry probably has not happened in other countries of the Euro Zone yet, and inflation figures are to be seen next week. Furthermore, for next week, the headlines in the U.K. will be in the spotlight, because numbers on output and inflation will be released.

Expected Ranges

USD/CAD: 1.3017 – 1.3069 ▼

EUR/USD: 1.1101 – 1.1132 ▲

GBP/USD: 1.3050 – 1.3095 ▲

AUD/USD: 0.6879 – 0.6913 ▲

NZD/USD: 0.6620 – 0.6656 ▲


Posted by OFX

Aussie consolidates as Trump pours cold water on retaliation in the Middle East

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The Australian Dollar enjoyed a day of two halves yesterday as it struggled to arrest the momentum after days of steady decline. Starting the day on the same recent negative trajectory the Aussie extended its declines to hit as low as 0.6848 before modestly bouncing up during the American session after President Trumps speech on the on-going tensions with Iran. Opening this morning at 0.6870, the Aussie nevertheless remains under pressure.

In what proved to be a pivotal day for geo-politics, resulted in a subdued day for FX markets with only marginal declines for the Aussie throughout the day. There was a distinct flight to safety at one point of the day however with risk sentiment deteriorating on the prospect of another conflict in the Middle East. Despite the escalation between the US and Iran, the market turned a corner when President Trump announced that no American citizens were harmed and hinted at no further retaliation. The Aussie bounced significantly on the news to stay level pegging with yesterday mornings’ open.

Closer to home, there was some economic data that shored up the Aussie’s consolidation with Australian Building Permits recording an increase of 11.8% in November. Compared with the previous result of -7.9%, it was a nice recovery. Moving into Thursday Australia will release its November Trade Balance to drive direction domestically with the Aussie also keeping a close eye on the on-going conflict in the Middle East.

Key Movers

Markets remained relatively static throughout Wednesday with little on the economic calendar to drive direction. There was ADP Non-Farm Employment Change in the US that did strengthen the Greenback throughout the day but momentum was primarily dictated by the escalation in the Middle East. Risk assets took a tumble initially as news filtered through from the region with the notable sharp fall in US bond yields leading the way. Nevertheless, President Trump allayed fears of a full-scale escalation which ultimately improved risk sentiment to result in a neutral day for FX markets. Opening this morning at 97.27 on the US Dollar Index, the US Dollar remains a strong performer with an increase of 0.27% for the day.

Expected Ranges

AUD/CAD: 0.8924 – 0.8986 ▼

AUD/EUR: 0.6149 – 0.6222 ▼

GBP/AUD: 1.9023 -1.9103 ▲

AUD/NZD: 1.0296 – 1.0358 ▼

AUD/USD: 0.6831 – 0.6902 ▼


Posted by OFX

The Greenback touches new highs, confirmed by strong employment numbers

OFX Daily Market News

Posted by OFX

USD – United States Dollar

The Greenback has been strong in overnight trading; however, in a “buy the rumor sell the fact” style, it has slightly fallen over the last few minutes after the U.S. Jobless Claims decreased to a lower level over the last five weeks. Filings for U.S. unemployment claims came in at 214k versus the 221k expected. This situation confirms the strength in the labour market, where American companies may be less likely to let employees go amid an elevated level of job openings and difficulty hiring talented and experienced staff.

In the last few minutes, the U.S. dollar has erased some of its gains after Fed Vice Chairman Richard Clarida said that looking ahead, the monetary policy situation is not at a “preset course.” He added that the Fed would decrease the number of repo operations it has conducted as the Fed’s $60 billion of monthly Treasury bill purchases help to increase the level of reserves in the financial system, adding that he does not see the need for some repo operations to continue at least through April. However, he said that the economy was in the right place.

Key Movers

Early this morning on the other side of the pond, in the UK, the outgoing BoE Governor Mark Carney inferred that there might be an impact on rates. The GBP/USD pair falls 0.37 percent towards 1.3040.

Expected Ranges

USD/CAD: 1.3039 – 1.3094 ▲

EUR/USD: 1.1075 – 1.1137 ▼

GBP/USD: 1.2995 – 1.3095 ▼

AUD/USD: 0.6849 – 0.6892 ▼

NZD/USD: 0.6589 – 0.6628 ▼


Posted by OFX

Aussie dollar retreats below 69 US cents

OFX Daily Market News

Posted by OFX

AUD – Australian Dollar

The Australian dollar is weaker this morning when valued against the Greenback, falling to an overnight low of 0.6858. Australian data released at the beginning of the day didn’t help, as the ANZ Job Advertisements fell by 6.7% in December after dropping 1.8% in November. It’s been quite the climb down in the aussie after temporarily breaching above 0.7000 against the dollar to end 2019. Since then, price has retreated and now looks on course for a fifth straight day of declines as markets increase bets on the RBA easing next month.

On the release front today will release November Building Permits, seen up by 2.0% MoM following an 8.1% decline in October. From a technical perspective, the AUD/USD pair is currently trading at 0.6870. We continue to expect support to hold on moves approaching 0.6840 while now any upward push will likely meet resistance around 0.6900.

Key Movers

The Greenback was the biggest mover overnight posting gains against most major rivals. The dollar strengthened on the back of better-than-expected U.S. non-manufacturing sector and factory orders data also lifted the dollar. The ISM Non-Manufacturing PMI improved to 55 in December from 53.9 in November, beating the market’s expectation of 54.5. Factory Orders in the country decreased by less than anticipated, down by 0.7% in November. Rest of the week is fairly quiet with the only relevant figure will be the ADP survey on private jobs’ creation ahead of the Nonfarm Payroll report on Friday.

Expected Ranges

AUD/USD: 0.6750 – 0.6950 ▼

GBP/AUD: 1.9000 – 1.9200 ▲

AUD/NZD: 1.0250 – 1.0450 ▼

AUD/EUR: 0.6050 – 0.6250 ▼

AUD/CAD: 0.8850 – 0.9050 ▼


Posted by OFX