Australian dollar falls on U.S. Federal Reserve’s outlook

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar is weaker this morning when valued against the Greenback. The Aussie hit a 24-hour low of 0.7204 after failing once again to sustain gains beyond the 0.7300 figure.

On the data front yesterday afternoon we saw the release of soft Chinese industrial profits data during the session. While profits grew 9.2% from a year earlier in August, that was well below the 16.2% level seen in the 12 months to July. There are no scheduled release today for Australia.

From a technical perspective, the AUD/USD pair is currently trading at 0.7206. We continue to expect support to hold on moves approaching 0.7190 while now any upward push will likely meet resistance around 0.7225.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0850– 1.0950

The New Zealand dollar opened yesterday morning at 0.6660 following the release by RBNZ that they would hold interest rates at record lows for the foreseeable future. Guidelines in Governor Orr’s remarks were that the next move could be either up or down but remarked that the cash rate will be around these levels into 2019 and 2020. The central bank also stated that inflation remains in the mid-point of the target range.

The Kiwi dollar saw a linear move downwards for the remainder of the trading session as the greenback gathered strength overnight and continued its momentum following the Federal Reserve’s decision to increase interest rates by 0.25%.

Eventual lows were seen this morning of 0.6610, down 0.7% for the day as we look forward to this morning’s Building Consents release. The NZD/USD cross will look to retest support to end the week at the US 66 cent handle.

The RBNZ kept interest rates on hold as expected at the benchmark rate of 1.75% as RBNZ Governor Orr expects to keep their Official cash rate at these levels into 2020. With this news the Kiwi saw a brief rally higher but nothing substantial in a busy 24 hours on the markets.

The New Zealand Dollar opens this morning at 0.6660 with most notably United States Final GDP and Core Durable Goods Orders due for release this evening.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.8000 – 1.8300

The cable touched highs of 1.3162 during European trading following encouraging Brexit-related commentary from the EU’s chief negotiator Michael Barnier. Barnier tweeted that the EU is continuing to work towards an “orderly Brexit” and reinforced that the future partnership with the UK would include a “close economic relationship”. Contrasting this, we also had commentary from Bank of England’s chief economist that Brexit worries are elevated resulting in economic uncertainty.

With no UK macroeconomic datasets released on Thursday, GBP/USD was at the mercy of USD strength following a hawkish assessment of the latest FOMC statement and stronger than expected Q2 GDP growth out of the world’s largest economy. This saw the pound fall to 1.3074 against the greenback during the US session where we have seen some consolidation ahead of Fridays UK Q2 GDP which is expected to show quarterly growth of 0.4%.

On the technical front, immediate GBP/USD support can be seen at 1.3055 and 1.3010 with any topside moves expected to meet resistance at 1.3165.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7150 – 0.7240

The dollar rose to its highest in more than a week against a basket of major currencies on Thursday, boosted by the Federal Reserve’s outlook for more rate hikes beyond this year as the euro weakened on worries about the Italian budget.

On the data front yesterday we saw the release of U.S. Real gross domestic product (GDP) which confirmed the U.S. economy grew as expected in the second quarter, rising at its quickest rate in nearly four years. US growth was confirmed at an annual rate of 4.2%, according to the final version of Q2 GDP, while for the three months to June, growth was revised to 3.3% from the previous estimate of 3.2%.

Looking ahead today and the US will release August Spending and Incoming data, alongside with monthly Personal Consumption Expenditures (PCE) figures, the Chicago Purchasing Managers’ Index (PMI) and the Michigan Consumer Sentiment Index for September.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6150 – 0.6220

The Euro was one of the worst performing currencies in overnight trading as a last-minute dispute in Italy undermined the currency. Compounding the declines was the strengthening Greenback which saw a rise across the board. These factors led to the Euro depreciating approximately 0.8% to open this morning at 1.1635.

Italy was again the epicentre of Euro weakness as their two deputy PM’s and the Finance Minister were in dispute over a demand for extra spending and thus the overall size of the fiscal deficit. The Italian cabinet met early this morning and agreed a sharply higher public spending plan, sending the Euro downwards. The issues in Italy tarnished an overwise positive day domestically with the German CPI reading surprising to the upside. The positive reading leaves todays EU CPI reading in much better footing.

Moving into Friday, the Euro turns to a number of CPI readings across the Eurozone with Spain and Italy both releasing figures. The Eurozone as a whole is also due to release CPI figures.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9350 – 0.9450

The Canadian Dollar hit its lowest level since September 11th and down 0.2% for the day as continued worries over NAFTA negotiations as the USD/CAD hit 1.3080 overnight. There is still a possibility of a NAFTA deal by this weekend should they come to an agreement by Sunday.

The release of a weak durable goods order and a rally in Oil futures by 0.8% in the United States saw a brief respite for the Loonie trading back to 1.3020 during the local session. the potential that there is still a possibility of a NAFTA deal by this weekend should they come to an agreement by Sunday.

Bank of Canada Governor Stephen Poloz said that the bank will continue to follow a gradual approach to raising rates dependent on how economic data comes to fruition over the coming years and will be closely watching rising inflation levels for the foreseeable future.

Statistics Canada will release GDP figures this evening for the month of July with the potential for a small uptick in growth for the month of 0.1%.

 

 

 

Posted by OFX

US Dollar Finishes the Week Mixed against it G10 Counterparts

OFX Daily Market News

Posted by OFX

  United States Dollar

The dollar rose to its highest in more than a week against a basket of major currencies on Thursday, boosted by the Federal Reserve’s outlook for more rate hikes beyond this year. Adding to the move higher was euro weakness on worries about the Italian budget.

On the data front yesterday, we saw the release of U.S. Real gross domestic product (GDP) which confirmed the U.S. economy grew as expected in the second quarter, rising at its quickest rate in nearly four years. US growth was established at an annual rate of 4.2%, according to the final version of Q2 GDP, while for the three months to June, growth was revised to 3.3% from the previous estimate of 3.2%.

Today in the US we had the release of Personal Income for August missing expectations of 0.4 printing at 0.3%. Monthly Personal Consumption Expenditures (PCE) figures missed expectations, but the higher impact figure which is annualized PCE did meet consensus at 2%. Later this morning we have the Chicago Purchasing Managers’ Index (PMI) and the Michigan Consumer Sentiment Index for September.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2960-1.3029

The Canadian Dollar hit its lowest level since September 11th and down 0.2% for the day as continued worries over NAFTA negotiations saw the USD/CAD hit 1.3080 yesterday. There is still a possibility of a NAFTA deal by this weekend should they come to an agreement by Sunday. The release of a weak US durable goods order and a rally in Oil futures by 0.8% saw a brief respite for the loonie trading back to 1.3020 during yesterday’s session.

Bank of Canada Governor Stephen Poloz said that the bank would continue to follow a gradual approach to raising rates dependent on how economic data comes to fruition over the coming months and will be carefully watching rising inflation levels for the foreseeable future.

Statistics Canada release monthly GDP figures for July expectations were for a small uptick in growth of 0.1% from last month’s 0.0% reading data printed at 0.2% loonie moved higher on the release as market participant factor in further a BOC rate high this month. Raw materials missed as did industrial product prices at -4.6% and 0.5% respectively. Support on the USDCAD is seen at 1.2987 and 1.2945 while resistance is at 1.3029 and 1.3071.

 

 

 

  Euro

EUR / USD Expected Range: 1.1570-1.1651

The Euro was one of the worst performing currencies in overnight trading as a last-minute dispute in Italy undermined the currency. Compounding the declines was the strengthening greenback which saw a rise across the board. These factors led to the Euro depreciating approximately 0.8% to open this morning at 1.1580.

Italy was again the epicenter of Euro weakness as their two deputy PM’s, and the Finance Minister were in dispute over a demand for extra spending and thus the overall size of the fiscal deficit. The Italian cabinet met early this morning and agreed a sharply higher public spending plan, sending the Euro downwards. The issues in Italy tarnished an overwise positive day domestically with the German CPI reading surprising to the upside.

Moving into Friday, the Euro turns to some CPI readings across the Eurozone with Spain and Italy both releasing figures. The Eurozone also released CPI figures, Core CPI which excludes volatile components like food and energy faded in comparison to last month and consensus posting a 0.9%, while annualized CPI came in at the consensus of 2.1%. EURUSD first support is seen at 1.1560 while resistance to the topside is at 1.1627.

 

 

 

  British Pound

GBP / USD Expected Range: 1.3035-1.3090

The cable yesterday touched highs of 1.3162 during European trading following encouraging Brexit-related commentary from the EU’s chief negotiator Michael Barnier. Barnier tweeted that the EU is continuing to work towards an “orderly Brexit” and reinforced that the future partnership with the UK would include a “close economic relationship.” Contrasting this, we also had commentary from Bank of England’s chief economist that Brexit worries are elevated resulting in economic uncertainty.

With no UK macroeconomic datasets released on Thursday, GBP/USD was at the mercy of USD strength following a hawkish assessment of the latest FOMC statement and stronger than expected Q2 GDP growth out of the world’s largest economy. This saw the pound fall to 1.3074 against the greenback during yesterday’s NA session where we saw some consolidation ahead of Fridays UK Q2 GDP. UK Q2 GDP came in at expected to show quarterly growth of 0.4%, but annualized missed expectations of 1.3% printing a 1.2%, the pound continues to soften.

On the technical front, immediate GBP/USD support can be seen at 1.3029 and 1.2987 with any topside moves expected to meet resistance at 1.3072 and 1.3114.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7202-0.7225

The Australian Dollar is weaker this morning when valued against the Greenback. The Aussie hit a 24-hour low of 0.7204 after failing once again to sustain gains beyond the 0.7300 figure.

On the data front last night, we saw the release of soft Chinese industrial profits data during the overnight session. While profits grew 9.2% from a year earlier in August, that was well below the 16.2% level seen in the 12 months to July. There was no scheduled release today for Australia.

From a technical perspective, the AUD/USD pair is currently trading at 0.7211. We continue to expect support to hold on moves approaching 0.7190 while now any upward push will likely meet resistance around 0.7225.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6599-0.6620

The New Zealand dollar opened yesterday morning at 0.6660 following the release by RBNZ that they would hold interest rates at record lows for the foreseeable future. Guidelines in Governor Orr’s remarks were that the next move could be either up or down but remarked that the cash rate would be around these levels into 2019 and 2020. The central bank also stated that inflation remains in the mid-point of the target range.

The Kiwi/Dollar move downwards for the remainder of the trading session as the greenback gathered strength overnight and continued its momentum following the Federal Reserve’s decision to increase interest rates by 0.25%.

Eventual lows were seen this morning at 0.6598, down 0.75% overnight. The NZD/USD cross continues to test this critical support level to end the week at the US 66 cent handle.

 

 

 

Posted by OFX

Market Reaction is Mixed as Participants Adjust to Yesterday’s Rate Hike from the FOMC

OFX Daily Market News

Posted by OFX

  United States Dollar

Yesterday saw the US Federal Reserve raises interest rates as expected, taking its benchmark to no greater than 2.25%. The move was fully priced into the markets, so it was the statement, economic projections and press conference from Chairman Jerome Powell that drove moves in the greenback. The statement removed mention of the word “accommodative” when describing its monetary policy which indicates we are exiting emergency measures and approaching a time when rate hikes will no longer be necessary. The omission of this word saw the initial drop in the greenback with cable briefly jumping through 1.32 and EUR/USD coming close to hitting 1.18. After this knee-jerk reaction, the uptick in growth forecasts for this year and next and the expectation for future rate hikes from the FOMC (the “dot plot”) showing we are set for a December move and three more in 2019 saw the dollar gain.

US Fundamental this morning were softer as initial jobless claims rose to 214k and pending home sales fell -1.8% from a revision of -0.8%. Annualized pending home sales meet expectations of -2.3%. Today we have FOMC member Kaplan speaking followed by Chair Powell speaking again at 4:30 pm eastern time.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.3015-1.3072

The Canadian Dollar diminished overnight to reach one-week lows following further concerns that Canada would be left out of ongoing NAFTA trade negotiations. Prime Minister Justin Trudeau addressed the issues in an appearance on Wednesday as they work towards an agreement that will include them in a deal between the United States and Mexico, due for soft deadline by the weekend.

Canadian dollar participants look towards Bank of Canada’s Governor Poloz’ speech this evening where he is due to speak at an Economic council dinner along with GDP figures for the month of July due for release tomorrow.

The USD/CAD currently trades at 1.3034, support is seen at 1.2987 while key resistance is at 1.3071.

 

 

 

  Euro

EUR / USD Expected Range: 1.1685-1.1757

The Euro kept within a natural range in overnight trading, oscillating between 1.1730 and 1.1790. Initially supported by a less than hawkish FOMC statement, the Euro looked set to challenge 1.1800 but ultimately failed to hold its gains and fell from its position of strength. Opening this morning at 1.1678.

The hard-hitting news was the FOMC announcement and additional statement which held few gremlins for investors. The widely expected US rate hike to 2.25% did occur, and the statement remained relatively optimistic, although did omit the word ‘accommodative’ from the text. Markets took the removal of the word as a sign that the Fed sees the expected rate hikes as approaching neutral territory.

Traders will now look to today’s economic calendar which sees ECB president Draghi and BOE Governor Carney deliver speeches before we get UK Q2 GDP and current account metrics on Friday.

 

 

 

  British Pound

GBP / USD Expected Range: 1.3108-1.3179

The pound slipped 0.1% on Wednesday as markets remained cautious about Brexit negotiations between Brittan on the EU. Still trading above Fridays low of 1.3041, the GBP/USD opens this morning New York time at 1.3105 with GBP/EUR also gaining 0.2% on the day. Concerns that we might see another election seem to have dissipated after Prime Minister May pushed back on the idea when questioned on her way to New York.

Traders will now look to today’s quiet calendar which sees ECB president Draghi and BOE Governor Carney deliver speeches before we get UK Q2 GDP and current account metrics on Friday. On the technical front GBP/USD seems relatively well supported around 1.3100 with any upside moves likely to be met by resistance at the 1.3200 handle.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7220-0.7268

The Australian Dollar has seesawed its way through the overnight and into the North American session, having initially opened around 0.7250 against the U.S Dollar, the pair edged up towards 0.7280 during Asian trade however as the European markets opened the pair was unbale to hold on and relinquished all those gains touching a low of 0.7220.

As we moved through trading regions and sessions, investors eagerly awaited the US Fed announcement. The AUD/USD pair jumped up from 0.7255 to 0.7307, the highest in 4-weeks once the Fed’s decision of raising interest rates to 2.00-2.25% was released, the third hike of the year. The Greenback was sold off quickly following the statement which could be due to some bets that the removal of the “accommodative” in the statement indicates less urgency for tightening. The odds of a December rate hike slipped below 80% after the announcement according to the CME FedWatch tool.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6631-0.6678

The New Zealand dollar was boosted yesterday morning by a positive outlook in the latest release of ANZ Business confidence levels for September. The headline moved from – 50.3 to a reading of -38.3 suggesting businesses are still pessimistic about the local economy as indicators remain weak, albeit moving in the right direction. The result was a move higher for the Kiwi, shifting from 0.6645 at open to 0.6680 off the release. Trade balance figures were released a few hours before and came in at a deficit of 1.48bn driven by an increase in the cost of oil and diesel imports. The release damped the Kiwi initially by ten basis points before its move higher following the release of ANZ business confidence levels.

As expected the Federal Reserve lifted interest rates by a further 0.25%, with investors digesting their latest statement, the NZD/USD remained volatile for an hour oscillating between 0.6695 and back down to eventually settle at 0.6660. The RBNZ kept interest rates on hold as expected at the benchmark rate of 1.75% as RBNZ Governor Orr hopes to continue their Official Cash Rate at these levels into 2020. With this news, the Kiwi saw a brief rally higher but nothing substantial in a busy 24 hours on the markets.

The New Zealand Dollar opens this morning at 0.6624 with most notably United States Final GDP and Core Durable Goods Orders due for release this morning.

 

 

 

Posted by OFX

Aussie briefly touching 4-week highs before consolidating back around 0.7250

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar has seesawed it’s way through Wednesday’s of trade, having initially opened around 0.7250 against the U.S Dollar, the pair edged up towards 0.7280 during Asian trade however as the European markets opened the pair was unbale to hold on and relinquished all those gains touching a low of 0.7240.

As we moved west and the North American session was underway, investors eagerly awaited the US Fed announcement. The AUD/USD pair jumped up from 0.7255 to 0.7307, the highest in 4-weeks once the Fed’s decision of raising interest rates to 2.00-2.25% was released, the third hike of the year. The Greenback was sold off quickly following the statement which could be due to some bets that the removal of the “accommodative” in the statement indicates less urgency for tightening. The odds of a December rate hike slipped below 80% after the announcement according to the CME FedWatch tool.

This morning the pair is currently trading at 0.7257 at the time of writing with 0.7300 being the key short-term resistance level.

There is no local data due out today but a raft of US data including GDP and Durable Goods.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0800 – 1.1000

The New Zealand dollar was boosted yesterday morning by a positive outlook in the latest release of ANZ Business confidence levels for the month of September. The headline moved from – 50.3 to a reading of -38.3 suggesting businesses are still pessimistic about the local economy as indicators remain weak, albeit moving in the right direction.

The result was a move higher for the Kiwi, shifting from 0.6645 at open to 0.6680 off the release. Trade balance figures were released a few hours before and came in at a deficit of 1.48bn driven by an increase in the cost of oil and diesel imports. The release damped the Kiwi initially by 10 basis points before its move higher following the release of ANZ business confidence levels.

The local currency reached a high of 0.6685 during domestic play, before drifting back lower to pair all gains to 0.6640 heading into the announcement of bot the FOMC and RBNZ interest rate decisions.

As expected the Federal Reserve lifted interest rates by a further 0.25%, with investors digesting their latest statement, the NZD/USD remained volatile for an hour oscillating between 0.6695 and back down to eventually settle at 0.6660.

The RBNZ kept interest rates on hold as expected at the benchmark rate of 1.75% as RBNZ Governor Orr expects to keep their Official Cash Rate at these levels into 2020. With this news the Kiwi saw a brief rally higher but nothing substantial in a busy 24 hours on the markets.

The New Zealand Dollar opens this morning at 0.6660 with most notably United States Final GDP and Core Durable Goods Orders due for release this evening.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.8000 – 1.8200

The pound slipped 0.1% on Wednesday as markets remained cautious about Brexit negotiations between Brittan on the EU. Still trading above Fridays low of 1.3041, the GBP/USD opens this morning Sydney time at 1.3165 with GBP/EUR also gaining 0.2% on the day. Concerns that we might see another election seem to have dissipated after Prime Minister May pushed back on the idea when questioned on her way to New York.

Traders will now look to Thursday’s quiet calendar which sees ECB president Draghi and BOE Governor Carney deliver speeches before we get UK Q2 GDP and current account metrics on Friday. On the technical front GBP/USD seems relatively well supported around 1.3100 with any upside moves likely to be met by resistance at the 1.3200 handle.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7200 – 0.7310

The Greenback edged higher on Wednesday after the U.S. Federal Reserve voted unanimously and raised interest rates as expected for the eighth time. Fed policymakers lifted the overnight cash rate by a quarter of a percentage point to a range of 2.00 percent to 2.25 percent whilst flagging more rate hikes in December, while three more are foreseen for next 2019. U.S. Federal Reserve Chairman Jerome Powell said at a press conference that the ‘accommodative’ era is over.

China also announced overnight will cut import tariffs on goods (1,585 products) including machinery, paper, textiles and construction materials from Nov. 1, in a move that would lower costs for consumers and companies as a trade war with the U.S. deepens.

In afternoon trading, the dollar index, which measures the U.S. unit against six major currencies, was up 0.1 percent at 94.179. The S&P 500 fell 0.3 percent, with the bulk of losses coming in the final 20 minutes of trading.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6100 – 0.6220

The Euro kept within a familiar range in overnight trading, oscillating between 1.1730 and 1.1790. Initially supported by a less than hawkish FOMC statement, the Euro looked set to challenge 1.1800 but ultimately failed to hold its gains and fell from its position of strength. Opening this morning at 1.1745, the Euro looks relatively unchanged from yesterday’s open.

The hard-hitting news was the FOMC announcement and supplementary statement which held few gremlins for investors. The widely expect US rate hike to 2.25 did occur and the statement remained relatively optimistic, although did omit the word ‘accommodative’ from the text. Markets took the removal of the word as a sign that the Fed sees the expected rate hikes as approaching neutral territory. The Euro initially appreciated on the news but unwound those gains over the course of the morning.

Moving into Thursday the Euro is set to enjoy a slightly more active economic calendar with the M3 money supply and German CPI figures due for release. The United States is also due to release quarter on quarter GDP figures and ECB President Draghi is due to speak at the European Systemic Risk Board Conference.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9400– 0.9500

The Canadian Dollar diminished overnight to reach one-week lows following further concerns that Canada would be left out of ongoing NAFTA trade negotiations. Prime Minister Justin Trudeau addressed the issues in an appearance on Wednesday as they work towards an agreement that will include them in a deal between the United States and Mexico, due for soft deadline by week end.

The USD/CAD was driven from initial sideways action during the European session from 1.2960 to an overnight high of 1.3044 and was supported by the Federal Reserve’s decision to increase interest rates as expected from

Canadian investors look towards Bank of Canada’s Governor Poloz’ speech this evening where he is due to speak at an Economic council dinner along with GDP figures for the month of July due for release Friday evening.

The USD/CAD currently trades at 1.3034.

 

 

 

Posted by OFX

AUD hovers around 0.7250

OFX Daily Market News

Posted by OFX

  Australian Dollar

In what was a quiet day of trade for markets yesterday, the AUD slipped against the USD from 0.7262 to briefly touch lows of 0.7236 before rebounding into this mornings open where the local currency is currently buying 0.7247 US cents.

With US Consumer Confidence rising for the month of September recording its highest level in nearly eighteen years and beating expectations of a decline shows that consumers assessment of current conditions are positive which is bolstered by a strong economy and robust job growth in the US. The Consumer Board’s index rose to 138.4 this month from 134.7 in August. This data along with investors waiting for the result of the Federal Reserve’s FOMC meeting where an interest rate hike is widely expected kept a lid on the Aussie.

There is no local data due today, however all eyes on the US Federal Reserve tonight.

On the technical side, first line of support is at 0.7230 followed by 0.7200, on the upside, resistance at 0.7280 and 0.7300

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0880 – 1.1000

The New Zealand dollar continues to trade in a holding pattern as a quiet day on the markets for the local currency meant there has been little news to report. Opening the morning at 0.6635, the Kiwi moved in a steady direction higher but was limited to a thirty-point range for the day as we saw the NZD/USD cross top out at 0.6660.

We expect market participants to become more involved over the next 24 hours as both Trade balance and ANZ Business confidence levels are released this morning domestically. Furthermore, both the Central banks of the United States and New Zealand meet for their latest interest rate decision tomorrow morning where it is expected the Federal reserve will increase interest rates by 0.25% with the RBNZ expected to hold steady at 1.75%

The New Zealand Dollar opens this morning at 0.6645.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7980 – 1.8210

Tuesday saw the Sterling rise for the second consecutive day as a softer dollar and optimistic Brexit expectations buoyed the local unit. Rising 0.4% on the day the GBP/USD touched highs of 1.3193 as traders continued where they left off on Monday, unwinding short GBP/USD positions after last weeks selloff. The Pound was also slightly stronger against its European counterpart with the EUR/GBP opening this morning Sydney time at 0.8927.

It is worth noting that investors were still wary of bidding the sterling up above last weeks high of 1.3295 as the uncertain political situation, particularly prime minister May’s position, continue to weigh on the currency. The UK labour party conference has only served to highlight how divided the party is on Brexit.

Looking forward GBP/USD traders will be watching the FOMC monetary policy decision. Markets are expecting the FED to raise their benchmark interest rate however any surprises in the accompanying commentary from chairman Powell will inject some volatility into the market . Thursday also sees ECB president Draghi and BOE Governor Carney deliver speeches before we get UK Q2 GDP and current account metrics on Friday.

On the technical front GBP/USD seems relatively well supported around 1.3082 with any upside moves likely to be met by resistance at the 1.3200 handle. Technical levels to consider for the EUR/GBP are 0.8874 on the downside and 0.8975 on the topside.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7200 – 0.7290

Overnight we saw U.S. consumer confidence unexpectedly jumped to the highest in 18 years in September, according to a report Tuesday from the New York-based Conference Board. Sentiment improved a third month, reaching one of the best levels in a half century of data, as a strong job market and tax cuts keep Americans optimistic about the state of the economy. Consumer confidence index increased to a reading of 138.4 this month from an upwardly revised 134.7 in August.

Looking ahead today and there are no scheduled releases in the US. All eyes will be on tonight’s Federal Open Market Committee (FOMC) statement with the official cash rate expected to rise from 2.00% to 2.25%. Traders are predicting two more rate hikes this year from the Federal Reserve to go along with economic growth nearing 3 percent.

The greenback overnight, in terms of the US Dollar Index (DXY), fell a fifth of a percent to 94.06 against a basket of its rivals ahead of the Federal Reserve rate announcement.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6110 – 0.6205

With little on the domestic calendar and a quiet day in the papers the market has mainly tread water ahead of the United States FOMC’s policy announcement slated for release a little later today. The Euro was no exception to this, trading within a tight range to open this morning at 1.1766.

There was little for market pundits to digest in overnight trading but the European Central Bank did release a statement. ECB Chief Economist Praet downplayed remarks from the earlier speech by ECB President Draghi that was interpreted as mostly hawkish. The Euro did slide slightly on the news but mostly took it in its stride. Across the Atlantic, there was also some strong US consumer confidence numbers that reiterated the on-going strength of consumer spending and the tightening US labour market.

Moving into Wednesday all eyes are fixed on the upcoming FOMC meeting which is set to see the Federal Funds rate rise 25bps to 2.25%. Focus will also be on clues to the Fed’s thinking on projected rate guidance.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9340 – 0.9430

The Canadian Dollar continued its weekly trend and traded flat for most of the day ahead of the FOMC policy announcement slated for release today. Broader developments remain dominant in the absence of any high-level domestic data. Opening this morning at 1.2952, the Loonie looks to consolidate ahead of a much more active run to the weeks close.

There wasn’t too much to report on the Canadian domestic calendar but the Loonie did see some movement from developments on the geopolitical landscape. Crude oil prices continue to push higher, and commodities remain in demand to support the CAD. Conversely however, US Trade Representative Robert Lighthizer recently commented on the on-going NAFTA negotiations and stated that Canada was not making concessions on key NAFTA issues and time was running out. The market did oscillate on the news but ultimately ended in a stalemate ahead of the US FOMC’s policy announcement due on Wednesday.

Moving forward, all eyes remain fixed on the expected rate hike by the FOMC today. CAD investors will also keep a close eye on US GDP numbers on Thursday and the Bank of Canada’s Governor Poloz’ speech.

 

 

 

Posted by OFX

Interest Rate Decision Day in the US Today at 2PM EST

OFX Daily Market News

Posted by OFX

  United States Dollar

Yesterday US Consumer Confidence rose for September recording its highest level in nearly eighteen years and beating expectations. The US consumers assessment of current conditions is positive which is bolstered by a strong economy and robust job growth in the US. The Consumer Board’s index rose to 138.4 this month from 134.7 in August.

There are no scheduled releases in the US this morning. All eyes will be on this afternoon’s Federal Open Market Committee (FOMC) statement with the official cash rate expected to rise 0.25% to 2.25%. Traders are predicting two more rate hikes this year from the Federal Reserve one today and another in December as US economic growth moves higher. Market participants will focus on the statement released and Chairman Powell’s press conference. With next year’s policy path less clear participant question if Powell acknowledges US President, Donald Trump’s aggressive trade policy which may cause headwinds to growth in 2019.

The greenback yesterday, regarding the US Dollar Index (DXY), fell a fifth of a percent to 94.06 against a basket of its rivals. Through the overnight and into the North American open the Dollar Index is 0.25% higher at 94.36 ahead of the Federal Reserve rate announcement slated for 2 pm today followed by Chairman Powell’s press conference at 2:30 pm.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2903 – 1.3029

The Canadian Dollar continued its weekly trend and trading flat for most of the day yesterday and through the overnight ahead of the FOMC policy announcement slated for release today at 2 pm EST. Broader developments remain dominant in the absence of any high-level domestic data.

The Canadian economic calendar is light but the loonie has seen some minor movement from developments on the geopolitical landscape. Crude oil prices remain elevated as due commodities which do support the loonie. Conversely, however, US Trade Representative Robert Lighthizer recently commented on the on-going NAFTA negotiations and stated that Canada was not making concessions on crucial NAFTA issues and time was running out. The market did oscillate on the news but ultimately has ended in a stalemate ahead of the US FOMC’s policy announcement due later on today.

All eyes remain fixed on the expected rate hike by the FOMC today. CAD investors will also keep a close eye on US GDP numbers on Thursday and the Bank of Canada’s Governor Poloz’ speech at 5:45 pm, also Canadian monthly GDP is set for Friday.

 

 

 

  Euro

EUR / USD Expected Range: 1.1730-1.1779

With little on the domestic calendar and a quiet day in the papers the market has mainly tread water ahead of the United States FOMC’s policy announcement slated for release a little later today. The Euro was no exception to this, trading within a tight range to open this morning at 1.1741.

There was little for market pundits to digest in overnight trading, but the European Central Bank did release a statement. ECB Chief Economist Praet downplayed remarks from the earlier speech by ECB President Draghi that was interpreted as mostly hawkish. The Euro did slide slightly on the news but mostly took it in its stride. Across the Atlantic, there was also some strong US consumer confidence numbers that reiterated the on-going strength of consumer spending and the tightening US labor market.

Moving into Wednesday, all eyes are fixed on the upcoming FOMC meeting which is set to see the Federal Funds rate rise 25bps to 2.25%. The focus will also be on clues to the Fed’s thinking on projected rate guidance.

 

 

 

  British Pound

GBP / USD Expected Range: 1.3137-1.3182

Tuesday saw the Sterling rise for the second consecutive day as a softer dollar and optimistic Brexit expectations buoyed the pound. Rising 0.4% on the day the GBP/USD touched highs of 1.3193 as traders continued where they left off on Monday, unwinding short GBP/USD positions after last week’s selloff. The pound was also slightly stronger against its European counterpart with the EUR/GBP opening this morning Sydney time at 0.8927. It is worth noting that investors were still wary of bidding the sterling up above last week’s high of 1.3295 as the uncertain political situation, particularly prime minister May’s position, continue to weigh on the currency. The UK labor party conference has only served to highlight how divided the party is on Brexit.

Looking ahead today GBP/USD traders will be watching the FOMC monetary policy decision. Markets are expecting the FED to raise their benchmark interest rate, however, any surprises in the accompanying commentary from chairman Powell will inject some volatility into the market. Thursday also sees ECB president Draghi and BOE Governor Carney deliver speeches before we get UK Q2 GDP and current account metrics on Friday.

On the technical front GBP/USD seems relatively well supported around 1.3082 with any upside moves likely to be met by resistance at the 1.3200 handle.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7240-0.7282

In what was a quiet day of trade for markets yesterday, the AUD slipped against the USD from 0.7262 to briefly touch lows of 0.7236 before rebounding into this morning open where the local currency is currently buying 0.7250 US cents.

With US Consumer Confidence rising for September recording its highest level in nearly eighteen years and beating expectations of a decline shows that consumers assessment of current conditions is positive which is bolstered by a strong economy and robust job growth in the US. The Consumer Board’s index rose to 138.4 this month from 134.7 in August. This data along with investors waiting for the result of the Federal Reserve’s FOMC meeting where an interest rate hike is expected kept a lid on the Aussie.

There is no local data due today, however all eyes on the US Federal Reserve tonight. On the technical side, the first line of support is at 0.7230 followed by 0.7200, on the upside, resistance at 0.7280 and 0.7300

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6642-0.6678

The New Zealand dollar continues to trade in a holding pattern as a quiet day on the markets for the local currency meant there had been little news to report. Opening the morning at 0.664/, the Kiwi moved in a steady direction higher but was limited to a thirty-six-point range for the day as we saw the NZD/USD cross top out at 0.6660.

We expect market participants to become more involved over the next 24 hours as trader place directional bets as both the central banks of the United States and New Zealand meet for their latest interest rate decision today and this evening. It is expected the Federal Reserve will increase interest rates by 0.25% with the RBNZ expected to hold steady at 1.75%

The New Zealand Dollar opens this morning at 0.6647.

 

 

 

Posted by OFX

Australian dollar drops amid risk-averse mood

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar opened yesterday morning gapping lower against the Greenback at 0.7260 after having a stellar run the week prior. The AUD/USD pair failed to hold onto the high 72’s and with the domestic docket unable to offer any support the Aussie was sold off through the Asian session touching a low of 0.7252. As we entered the European session, the AUD/USD quickly regained power and climbed up towards 0.7278 however, the move was short-lived and once again risk was off the table and the Aussie pulled back down to 0.7250.

The local economic calendar is light today, in fact we have nothing due until Friday so its likely the Aussie will be driven largely by US action, and with the Fed set to deliver another interest rate rise this week the Aussie could test the low 72’s

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0850 – 1.1000

The New Zealand Dollar retested the US 67 cent handle in trading overnight despite a quiet trading session with a lack of any data to start the week. With both Japan and China observing public holidays, liquidity was dampened with the Kiwi trading in a tight 20 point range for the majority of domestic play.

The NZD/USD eventual movements were lower, unable to breach 0.67, reaching highs of 0.6687 and drifting to lows this morning of 0.6637 following a bounce in the greenback after the implementation of new tariffs on Chinese imports.

This is little on the agenda today as the local market looks towards tomorrows Trade Balance and ANZ Business Confidence levels whereby last month households were upbeat about current conditions for the broader economy.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.8000 – 1.8200

The sterling bounced overnight, recouping 0.7% against the greenback to touch 1.3167 whilst also rising 0.3% against the euro. The movements came as traders began to unwind their short pound positions following comments from Brexit secretary Dominic Raab reflecting his confidence a deal with the European union would eventually be struck. The moves ensured the pound was the best performing currencies when benchmarked against its G10 peers, impressive given Fridays 1.5% decline.

Risks are still skewed to the downside with the pound looking vulnerable as Brexit negotiations continue to roll on and Prime minister May’s leadership coming under increasing pressure. Key political events to watch for this week are the conservative annual conference and the opposition Labour party’s vote this week on whether to retain a second Brexit referendum as an option if May’s plan fails.

We only have second tier housing to watch out for through Tuesday and Wednesday with the GBP/USD likely to take its cues from FED commentary surrounding their monetary policy stance and USA Q2 GDP due Thursday. Thursday also sees ECB president Draghi and BOE Governor Carney deliver speeches before we get UK Q2 GDP and current account metrics on Friday.

Technical levels to consider for the GBP/USD are 1.3090 and 1.3030 as downside supports whilst on the upside, resistances are aligned at 1.3165 before 1.3275.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7200 – 0.7300

The Greenback is stronger this morning on a bout of risk aversion on news that China had cancelled trade talks with the United States ahead of the impending introduction of new US tariffs on Chinese imports. US bond yields continued to push higher ahead of the US Fed’s rates announcement on Wednesday night, with benchmark US 10-year yields rising to 3.09%. The Dow also finished the session in the red 26,562.05 -181.45 (-0.68%).

Looking ahead today and there are no scheduled releases in the US. All eyes will be on Thursday’s Federal Open Market Committee (FOMC) statement.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6110 – 0.6220

The Euro continues to challenge the 1.18 mark against the Greenback with a hawkish ECB statement driving the momentum. Opening this morning at 1.1746, the Euro initially rose 60 pips to 1.1815 but failed to hold above the level.

In what was a mostly quiet start to the week, the Euro did enjoy some relevant news with ECB Chair Draghi speaking at a European Parliament committee meeting. Draghi, mostly repeated much of the same message he said at the last press conference but added there was a “relatively vigorous” uptick in underlying inflation. The positive comment saw the Euro move above the 1.18 level although it failed to hold its gains.

On the trade front, Reuters reported that the EU’s Trade Commissioner Cecilia Malmstrom has cooled expectations on any rapid progress in the US-EU trade negotiations. She noted that the dialogue between the two economies is still in the “exploratory” phase, signalling any detailed progress would be at the trade meeting slated for early November.

Moving into Tuesday, the Euro enjoys another quiet day on the economic calendar with only a Consumer Confidence reading in the US to drive direction

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9330– 0.9430

The Canadian dollar moved within a 50-pip range on Monday between levels of 1.2910 and a high of 1.2955. We saw the release of Wholesale trade which came in better than expected rising 1.5 percent to $63.9 billion from an expected 0.4 percent. Sales in July climbed in four of seven subsectors, representing approximately 66% of total wholesale sales. Leading the gains were personal and household goods: food, beverage and tobacco; and motor vehicle and parts subsectors led the gains in July, while the miscellaneous subsector posted the largest decline. In volume terms, wholesale sales increased 1.2%.

The USD/CAD is holding above the 1.29 handle as market participants now seemed to hold back from placing any aggressive bets and prefer to wait for fresh updates on the North American Free Trade Agreement (NAFTA).

 

 

 

Posted by OFX

President Trump to Address the United Nations General Assembly this Morning

OFX Daily Market News

Posted by OFX

  United States Dollar

The Federal Open Market Committee is overwhelmingly expected to hike rates to 2.25%. However, the accompanying statement/press conference will be scrutinized for clues as to whether we will see another move in the following quarter and what path policy will take next year.

US President, Donald Trump signed is Scheduled to speak to the United Nations General Assembly today at 10:15 am EST. The speech will likely focus on Iran and sanctions imposed on them do to their nuclear program. The European Union has introduced a mechanism the will allow European companies based in Iran to continue to do business inside the country sidestepping the U.S sanctions.

The Greenback is stronger this morning on a bout of risk aversion on news that China and the United States appear to be preparing for a long and extended trade war. US bond yields continued to push higher ahead of the US Fed’s rates announcement on Wednesday night, with benchmark US 10-year yields rising to 3.09%. The Dow also close the North American session in the red at 26,562.05 -181.45 (-0.68%). US Equity Futures are pointing to a positive open this morning with all the indices in the green.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2946 – 1.2987

The Canadian dollar moved within a 50-pip range on Monday between levels of 1.2910 and a high of 1.2955. We saw the release of Wholesale Trade which came in better than expected rise to $63.9 billion up 1.5% from a projected 0.4%. Sales in July climbed in four of seven subsectors, representing approximately 66% of total wholesale sales. Leading the gains were personal, and household goods: food, beverage and tobacco; and motor vehicle and parts subsectors led the gains in July, while the miscellaneous subsector posted the most significant decline. In volume terms, wholesale sales increased 1.2%.

The USD/CAD is holding above the 1.29 handle as market participants now seemed to hold back from placing any aggressive bets and prefer to wait for fresh updates on the North American Free Trade Agreement (NAFTA).

Oil continues to trade at the top of its range as traders continue to be bullish on crude. There is a cautious undertone as oil analysts see sufficient supply of oil over the next 12 months also cited is that any downside risk to demand form the trade war between China and the United States has not been fully priced in.

 

 

 

  Euro

EUR / USD Expected Range: 1.1731 – 1.1790

he Euro continues to challenge the 1.18 mark against the Greenback with a hawkish ECB statement driving the momentum. In what has been a quiet start to the week, the Euro did enjoy some relevant news with ECB Chair Draghi speaking at a European Parliament committee meeting yesterday. Draghi mostly repeated much of the same message he said at the last press conference but added there was a “relatively vigorous” uptick in underlying inflation. The positive comment saw the Euro move above the 1.18 level although it failed to hold its gains.

On the trade front, Reuters reported that the EU’s Trade Commissioner Cecilia Malmstrom had cooled expectations on any rapid progress in the US-EU trade negotiations. She noted that the dialogue between the two economies is still in the “exploratory” phase, signaling any detailed progress would be at the trade meeting slated for early November.

Moving into Tuesday, the Euro enjoys another quiet day on the economic calendar with only a Consumer Confidence reading in the US to drive direction.

 

 

 

  British Pound

GBP / USD Expected Range: 1.3095 – 1.3173

The sterling bounced overnight, recouping 0.7% against the greenback to touch 1.3167 while also rising 0.3% against the euro. The movements came as traders began to unwind their short pound positions following comments from Brexit secretary Dominic Raab reflecting his confidence a deal with the European Union would eventually be struck. The moves ensured the pound was the best performing currencies when benchmarked against its G10 peers, impressive given Fridays 1.5% decline.

Risks are still skewed to the downside with the pound looking vulnerable as Brexit negotiations continue to roll on and Prime minister May’s leadership coming under increasing pressure. Key political events to watch for this week are the conservative annual conference and the opposition Labour party’s vote this week on whether to retain a second Brexit referendum as an option if May’s plan fails.

We only have second-tier housing to watch out for through Tuesday and Wednesday with the GBP/USD likely to take its cues from FED commentary surrounding their monetary policy stance and US Q2 GDP due Thursday. Thursday also sees ECB president Draghi and BOE Governor Carney deliver speeches before we get UK Q2 GDP and current account metrics on Friday.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7236 – 0.7263

The Australian Dollar opens this morning gapping lower against the Greenback at 0.7253 after having a stellar run the week prior. The AUD/USD pair failed to hold onto the high 72’s and with the domestic docket unable to offer any support the Aussie was sold off through the Asian session touching a low of 0.7236. As we entered the European session, the AUD/USD quickly regained power and climbed up towards 0.7278 however, the move was short-lived and once again risk was off the table and the Aussie pulled back down to 0.7250.

The local economic calendar is light today, in fact, we have nothing due until Friday, so it is likely the Aussie will be primarily driven by US dollar action, and with the Fed set to deliver another interest rate hike this week, the Aussie could test the low 72’s.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6630 – 0.6658

The New Zealand Dollar retested the US 67 cent handle in the NA trading hours despite a quiet trading session and the lack of any data to start the week. With both Japan and China observing public holidays, liquidity was dampened with the Kiwi trading in a tight 20-point range for the majority of the day.

The NZD/USD eventual moved lower as it was unable to breach 0.67, reaching highs of 0.6687 and drifting to lows this morning of 0.6631 following a bounce in the greenback after the implementation of tariffs on Chinese goods.

Market Participants look toward tomorrows Trade Balance and ANZ Business Confidence levels whereby last month households were upbeat about current conditions for the broader economy.

 

 

 

Posted by OFX

Aussie sees its biggest weekly gain in 14-months

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar posted a 3-week high on Friday against its US counterpart defying all odds the pair would tumble in an environment of escalating trade war tensions between the United States and China. The local unit has seen its biggest weekly advance in 14 months and moved 2.26% higher from lows of 0.7141 to a high of 0.7303.

There was no local economic data releases however Standard and Poors upgraded its outlook in Australia AAA credit rating to “stable” from negative on Friday, providing the Aussie with a further lift. The move comes on the back of an earlier than expected return to surplus, record employment growth, spending restraint and an “orderly unwind” of the Sydney and Melbourne housing market.

Looking ahead, it’s a quiet week locally for macro-economic releases and therefore the Aussie will take directions from offshore events including further trade developments.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0730 – 1.0970

On Friday, the New Zealand dollar traded in a tight trading range, meeting some resistance just shy of 0.67, and closing the week around 0.6680. On the data front last week visitor arrivals were up 12,700 to 246,700. The biggest changes were in arrivals from: Australia (up 3,100) China (up 2,300) Malaysia (up 1,200). Credit Card Spending rose 7.7%.

The start of the week looks very quiet on the macroeconomic calendar. All kicking off on Wednesday with the release of Trade Balance and ANZ Business Confidence. On Thursday, all eyes will be on the Reserve Bank of New Zealand (RBNZ) Monetary Policy Statement which is expected to leave interest rates on hold at 1.75%.

From a technical perspective, the NZD/USD pair is currently trading at 0.6674. We continue to expect support to hold on moves approaching 0.6646 while now any upward push will likely meet resistance around 0.6727.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7880 – 1.8140

The cable started the week strongly last week as we saw strong domestic inflation numbers and retail sales come in above market expectations and markets remaining calm on the US-China trade war. The positive sentiment was short-lived through as the sterling plummeted during Friday’s European session after comments from British Prime Minister Theresa May proclaimed the European Union must supply an alternative Brexit proposal after a continued lack of progress during the Salzburg Summit. The pound shed 1.5% against the greenback to touch 1.3070, representing its biggest daily loss since June 2017.

Looking forward, it is shaping up as a busy week for the Sterling, with Brexit to remain front and Centre with negotiations between the EU’s Michel Barnier and the UK Brexit Secretary Dominic Raab set to continue. We also have further data due out of the domestic economy in the form of UK Q2 GDP with markets expecting 0.4$ QoQ and 1.3% YoY growth. This read will be closely watched after last weeks strong beats in inflation and retail sales data. We also have commentary from the Bank of England due throughout the week with the bank unlikely to release rates in the near term despite rising inflation and upbeat economic indicators.

On the technical front we see new GBP/USD supports at 1.3050 before 1.3000 with topside resistance firstly at 1.3082 and 1.3144.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7200 – 0.7310

The Greenback fell across the board on Thursday as a resurgence in global risk appetite after the United States and China announced new import tariffs this week that were less harsh than expected curbed safe-haven demand for the US. dollar.

Yesterday on the data front US unemployment claims fell to 201K for the week ended September 14, the lowest since November 1969 and better than the 210K expected. The Philly Fed Manufacturing Index for September jumped to 22.9, almost doubling August 11.9 and well above the 17.0 expected. Existing Home Sales were flat in August vs. an expected increase of 0.3%.

Looking ahead today and we will see the release of Flash Manufacturing PMI, forecast 55.1, above 50.0 indicates industry expansion.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6090 – 0.6230

The Euro continued its upward trajectory into Friday after hitting a weekly high of 1.1802 and its highest level since June 14th. Trading higher following a bout of greenback weakness, risk appetite continued to improve as US trade war tensions eased.

EUR/USD rallies stalled at the 1.18 handle following softer than expected headlines on Flash Manufacturing services in the Eurozone along with output growth in France ,softening to a 21-month low in September.

This week’s drivers for the pair will be this month’s Federal reserve meeting on Thursday whereby it is widely expected a further interest rate hike of 0.25% is on the cards. ECB President Mario Draghi speaks this evening before the European Parliament economic and monetary affairs committee in Brussels. Further clues could be seen in Draghi’s speech over potential rate hikes in 2019 as ECB is on course to unwind QE in December 2018.

The Euro settled at the close on Friday at 1.1750 and opens this morning at 1.1745.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9320 – 0.9440

The Canadian Dollar opens this morning at 1.2921 vs the Greenback and has held its head just above the 1.29 handle for now. The pair moved within a 50-pip range on Friday as we saw the release of local CPI and Retails Sales.

CPI reportedly dipped to 2.8% in August however, it has remained above the Bank of Canada’s target for the seventh consecutive month which has boosted expectations the Bank of Canada will again raise rates in October. Core-inflation prices rose in a range from +2.0% to +2.2%, based on the three preferred gauges used by the BoC. Market expectations of an interest rate hike in October, as reflected in the overnight index swaps market, rose to 88.74 percent from 84.46 percent before the release of the inflation data. The Bank has raised rates 4 times since July 2017 and maintains a 2% target inflation.

Meanwhile Retail Sales climbed 0.3 percent in July following a decline in June, led by demand for food and higher gas prices.

Looking ahead today sees the release Wholesale Sales which is expected at 0.4%.

 

 

 

Posted by OFX

US Interest Rates are Expected to Rise this Wednesday after the FOMC Meetings

OFX Daily Market News

Posted by OFX

  United States Dollar

This week’s big event is Wednesday night’s interest rate decision from the Federal Reserve in the States with a hike in interest rates all but guaranteed. The current economic situation in America undoubtedly justifies the move higher however markets will be keen to see if Fed Chairman, Jerome Powell echoes the market sentiment about the possibility of a slowdown in growth from next year. The US economy has so far been impervious to President Donald Trump’s trade war with China. However, there is growing concern that the aggressive measures implemented by Trump will come back to haunt the world’s biggest economy.

Beijing and Washington continue to retaliate against one, and another Washington has imposed $200 billion in duties while China has tariffs of $60 billion worth of US goods. Talks have broken down, and some believe China is willing to hold off until after the November 6th elections with polls favoring the Democrats, this may present a less harsh environment for negotiations.

Oil trades higher after OPEC and company signal that production need not be added to help supply, despite calls from Trump to increase supply to curb demand. Market participants are placings bets for crude to trade higher in the coming months citing 100 dollars a barrel as a target. Brent Crude traded at $80.93 its highest level since November 2014.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2861 – 1.2945

The Canadian Dollar opens this morning at 1.2933 vs. the greenback and has held its head just above the 1.29 handle for now. The pair moved within a 50-pip range on Friday as we saw the release of Canadian CPI and Retails Sales data. CPI reportedly dipped to 2.8% in August as expected and it remains above the Bank of Canada’s target for the seventh consecutive month. The higher stable reading has boosted expectations the Bank of Canada will again raise rates in October. Core-inflation prices rose in a range from +2.0% to +2.2%, based on the three preferred gauges used by the BoC. Market expectations of an interest rate hike in October, as reflected in the overnight index swaps market, rose to 88.74 percent from 84.46 percent before the release of the inflation data. The Bank has raised rates four times since July 2017 and maintained a 2% target for inflation.

Meanwhile, Retail Sales climbed 0.3 percent in July following a decline in June, led by demand for food and higher gas prices. Today sees the release of Wholesale Sales which was expected at 0.4%, printed better at 1.5% a solid print.

NAFTA continues to make headlines with President Trump having an agreement in place with Mexico, the White House is putting pressure on its Northern neighbor for a deal by the end of this month. Talks are expected to resume in New York as both Canada and the US are speaking at the United Nations National Assembly both US Trade Representative Lighthizer and Canadian Foreign Minister Freeland are scheduled to attend.

 

 

 

  Euro

EUR / USD Expected Range: 1.1724 – 1.1815

The Euro continued its upward trajectory into Friday after hitting a weekly high of 1.1802 and its highest level since June 14th. Trading higher following a bout of greenback weakness, risk appetite continued to improve as US trade war tensions eased. EUR/USD rallies stalled at the 1.18 handle following softer than expected headlines on Flash Manufacturing services in the Eurozone along with output growth in France, softening to a 21-month low in September.

This week’s drivers for the pair will be this month’s Federal Reserve meeting on Thursday whereby it is widely expected that a further interest rate hike of 0.25% is on the cards. ECB President Mario Draghi speaks at 9 am EST before the European Parliament economic and monetary affairs committee in Brussels. Further clues could be seen in Draghi’s speech over potential rate hikes in 2019 as ECB is on course to unwind QE in December 2018.

The Euro settled at the close on Friday at 1.1750 and opened this morning at 1.1752.

 

 

 

  British Pound

GBP / USD Expected Range: 1.3056 – 1.3167

The cable started the week strongly last week as we saw strong domestic inflation numbers and retail sales come in above market expectations and markets remaining calm on the US-China trade war. The positive sentiment was short-lived though as the sterling plummeted during Friday’s European session after comments from British Prime Minister Theresa May proclaimed the European Union must supply an alternative Brexit proposal after a continued lack of progress during the Salzburg Summit. The pound shed 1.5% against the greenback to touch 1.3070, representing its biggest daily loss since June 2017.

It is shaping up as a busy week for the Sterling, with Brexit to remain front and Centre with negotiations between the EU’s Michel Barnier and the UK Brexit Secretary Dominic Raab set to continue. We also have further data due out of the domestic economy in the form of UK Q2 GDP with markets expecting 0.4$ QoQ and 1.3% YoY growth. This read will be closely watched after last week’s strong inflation and retail sales data. We also have commentary from the Bank of England due throughout the week with the bank unlikely to release rates in the near term despite rising inflation and upbeat economic indicators.

On the technical front, we see new GBP/USD supports at 1.3114 before 1.3072 with topside resistance firstly at 1.3157 and 1.3201.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7248 – 0.7282

The Australian Dollar posted a 3-week high on Friday against its US counterpart defying all odds the pair would tumble in an environment of escalating trade war tensions between the United States and China. The local unit has seen its biggest weekly advance in 14 months and moved 2.26% higher from lows of 0.7141 to a high of 0.7303.

There were no local economic data releases overnight however Standard and Poors upgraded its outlook in Australia AAA credit rating to “stable” from negative on Friday, providing the Aussie with a further lift. The move comes on the back of an earlier than expected return to surplus, record employment growth, spending restraint and an “orderly unwind” of the Sydney and Melbourne housing market.

Looking ahead, it’s a quiet week locally for macroeconomic releases, and therefore the Aussie will take directions from offshore events including further trade developments.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6654 – 0.6689

On Friday, the New Zealand dollar traded in a tight trading range, meeting some resistance just shy of 0.67, and closing the week around 0.6680. On the data front, last week visitor arrivals were up 12,700 to 246,700. The biggest changes were in arrivals from: Australia (up 3,100) China (up 2,300) Malaysia (up 1,200). Credit Card Spending rose 7.7%.

The start of the week looks very quiet on the macroeconomic calendar. All kicking off on Wednesday with the release of Trade Balance and ANZ Business Confidence. On Thursday, all eyes will be on the Reserve Bank of New Zealand (RBNZ) Monetary Policy Statement which is expected to leave interest rates on hold at 1.75%.

From a technical perspective, the NZD/USD pair is currently trading at 0.6663. We continue to expect support to hold on moves approaching 0.6644 while now any upward push will likely meet resistance around 0.6727.

 

 

 

Posted by OFX