Bank of England set to raise rates on Super Thursday.

OFX Daily Market News

Posted by OFX

  British Pound

The pound stuck to a narrow range vs. the US dollar yesterday, trading just above 1.31 for most of the day. UK Manufacturing PMI printed more or less in line with expectations and US data was mixed. Investors have also been reluctant to do much ahead of today’s much anticipated Bank of England monetary policy announcement.

The Old Lady is widely expected to raise interest rates from 0.5% to 0.75%, but it’s not fully priced in, and there are a few different scenarios that could play out, particularly so when Carney speaks following the announcement. If the bank raises rates but Carney cites Brexit risks and signals interest rate neutrality for the foreseeable – the most widely anticipated scenario – then any upside in GBP may be limited. If the bank leaves rates on hold (markets expect there’s a 10% chance of this happening), no matter what Carney says, the pound will likely fall, and break down through 1.30. The bank and Carney’s credibility may also be at risk in this circumstance, given they haven’t taken an opportunity over the last month or so to extinguish the market’s growing expectations that the BoE will hike today. Other scenarios such as raising rates/whilst taking a hawkish stance are so unlikely at this stage it’s hardly worth considering, but either way there’s a good chance we’ll see some volatility in the pound today.

The bank also publishes its Inflation Report in which we’ll get details on forecasts for short, medium and long term inflation. In the last report the BoE saw inflation at 2.35% in 2-3 years, based on unchanged monetary policy. Meanwhile, there’s less data due out from the US today but traders will have half an eye on tomorrow’s Non-Farm Payrolls.

 

 

 

  United States Dollar

GBP / USD Expected Range: 1.2880 – 1.3200

The dollar was stable for the most part yesterday, slightly weaker if anything come the end of the New York session. Data by way of weaker than expected ISM Manufacturing PMI and stronger than expected ADP Non-Farm Employment Change – a forerunner to tomorrow’s Non-Farm Payrolls – mostly balanced each other out. Investors were also more interested in what the FOMC had to say that evening.

The Fed left rates on hold, as widely expected, and its statement was little changed from the last one. Among the few changes, the Fed upgraded household spending from “has picked up” to “has grown strongly”. They also said that they see “strong” economic growth. The announcement was a bit of a damp squib in the end as trading conditions seem to be overshadowed by confirmation of Trump proposing raising tariffs on Chinese imports from 10% to 25%.

Despite this, the dollar seems well bid this morning with EUR/USD slipping under 1.1650 and GBP/USD dropping below 1.31 in the last couple of hours.

 

 

 

  Euro

GBP / EUR Expected Range: 1.1100 – 1.1300

EUR/USD traded sideways for most of the day yesterday, just shy of the 1.17 figure for the most part. European manufacturing PMIs, released yesterday morning, were mostly mixed and a non-event as far as EUR/USD traders were concerned.

There’s no European data due out today and so EUR/USD will likely take its lead from offshore events and associated global risk appetite.

 

 

 

  Australian Dollar

GBP / AUD Expected Range: 1.7550 – 1.7840

AUD/USD is weaker this morning, sold off following confirmation of proposals by the US to raise tariffs on Chinese imports. In other news overnight, Australian trade data beat market expectations but it didn’t have too much of an impact on the local unit.

Aussie retail sales data is due to be released tonight and will be a key focus for AUD/USD traders in Sydney. The US jobs report, due to be released later in the week, will also be a focus in the London/New York sessions on Friday.

 

 

 

  Canadian Dollar

GBP / CAD Expected Range: 1.6900 – 1.7150

The Canadian dollar has been holding well lately despite the drop in oil prices and potential unilateral NAFTA deal between the US and Mexico.

Yields in Canada have been trading higher, supporting the CAD, with the 2-year trading at a multi-year high. USD/CAD is little changed around 1.30. Support is seen at 1.2950 while 1.3050 will now act as short-term resistance.

 

 

 

  New Zealand Dollar

GBP / NZD Expected Range: 1.9140 – 1.9410

For the same reasons we’ve seen AUD/USD fall in the last 12 hours or so, NZD/USD has also fallen. Risk is off following confirmation of the US tariff proposals and many of the commodity currencies have suffered declines as a result. NZD/USD opens this morning at .6765.

 

 

 

Posted by OFX

Aussie dollar trending higher ahead of FOMC meeting

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar opens this morning marginally higher than yesterdays’ open as commodity currencies slightly out-performed in overnight trading. Upside movements were seen after a positive reading for the building sector as new building approvals rebounded in June by 6.4% in seasonally adjusted terms.

The Aussie saw initial movements to 0.7425 before oscillating between 0.7405 and 0.7435 during the release of the eagerly anticipated BOJ meeting which saw a more dovish stance than expected. Inflation forecasts were downgraded and with the decision to keep interest rates at record lows for an extended period of time, introducing forward guidance for the first time in their monetary policy report.

Japanese Yen was sold off in droves and the AUD/JPY cross reached a two week high rallying from 82.20 to an overnight high of 83.20.

The Australian dollar saw overnight highs of 0.7440 before drifting lower into the North American session as United States CB consumer confidence beat expectations.

Looking forward, investors will be focused on this evenings Federal reserve meeting where it is expected rates will remain on hold and currently pricing a 80% of Federal Reverse Governor increasing interest rates in September.

The Australian dollar opens this morning at 0.7425.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0810 – 1.0980

The New Zealand Dollar has traded sideways against the Greenback, moving within a tight range 30 pips from 0.6800 to 0.6830. Local data released did not provide much support to the pair with the ANZ business outlook survey showing more weakness in business confidence, down to a 10-year low. The outlook for July showed 45% of businesses were pessimistic about the general outlook for the economy with confidence sliding before the general election in 2017. Economists believe a shift down in confidence can be also due to a labour- led government and uncertainty about the policy direction. In other news, NZ Building permits fell by 7.6% in June, after a large rise of 6.9% in May.

The focus domestically today is the labour market report, where we expect the unemployment rate to remain unchanged at 4.4%. Of possibly more interest is the wage growth data, where we’re expecting a relatively large 0.7% increase in the LCI, in part due to the April 1st increase in the minimum wage.

NZD/USD is holding on to 68c at the moment, with key support at 0.6720 and resistance up at 0.6860.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7580 – 1.7750

The Great British Pound was rather lifeless in overnight trading with momentum almost exclusively being derived from US Dollar strength and weakness. The tight trading range did see the Sterling bounce between 1.3089 and 1.3172 but ultimately the Pair settled in the 1.3120 region this morning, virtually unchanged from Monday’s open.

There wasn’t too much to chew on in overnight trading with the bulk of the movements being driven by the Pounds counterpart, the Greenback. Initially the US Dollar weakened across the board which saw a slight strengthening for the Sterling. However, sentiment reversed sharply when Bloomberg reported that China and the US were looking to restart trade talks in order to defuse the escalating trade war. Markets responded positively to the news which saw the Greenback change course and reverse gains the Pound made earlier in the day. Commodity currencies also responded strongly to the news with CAD and AUD being the best performers. The Aussie climbed steeply against the Pound to post marginal gains over the last 24 hours, ultimately leaving the Sterling in neutral territory across the board.

Attentions now turn to a jam-packed Wednesday and Thursday for direction with Manufacturing PMI numbers slated for release during UK business hours. The USA then ramps up the economic calendar with PMI, employment figures, crude oil inventories and the FOMC statement to digest. The British Pound then looks to close out Thursday with its Inflation report and monetary policy statement.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7360 – 0.7460

The US Dollar is gained ground across the board overnight on the back of a dovish statement from the Bank of Japan (BOJ) and news China will now seek to defuse any trade tensions with the US. The BOJ reaffirmed its commitment to maintain rates at record lows after acknowledging that reaching the 2.0% inflation target is taking longer than expected. Traders looking for any sign of some sort of reduction of monetary stimulus rushed to sell back the yen.

On the US data front yesterday June Personal Consumption Expenditures (PCE) inflation report was up in June 0.4%, although core inflation was slightly below market’s forecast, resulting in 1.9% YoY, missing expectations of 2.0%. Looking ahead today and all attention will turn to Federal Open Market Committee (FOMC) Monetary Policy Statement which is expected to be a non-event with interest rates to be left on hold at 2%.

From a technical perspective, The USD/JPY pair soared to 111.95, its highest in two weeks, on a combination of a disappointing Bank of Japan’s (BOJ) announcement. The USD/JPY pair is currently trading at 111.87. We continue to expect support to hold on moves approaching 111.75 while now any upward push will likely meet resistance around 112.05.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6300 – 0.6390

The Euro traded to a high of 1.1746 versus the greenback yesterday, supported by inflation data coming slightly better than expected (core inflation came at 1.1% YoY versus 1% expected).

Later on, weaker Eurozone GDP data plus strong US data were enough to put a cup on the EURUSD spike and the 1.1750 level acted as good resistance. The Euro reversed gains and closed around 1.1690, 0.13% weaker versus the USD.

We’ll get Manufacturing numbers tonight and Unemployment, PPI and CPI data Tomorrow so expect some volatility on the EURUSD. 1.1650 and 1.1750 will be acting as short-term support/resistance.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9630 – 0.9730

With commodities trading higher overnight, supported by Headlines reporting that China-US trade talks are back on, the loonie was able to trade slightly better versus the USD, closing 0.20% stronger at 1.3006.

Despite having been locked out of the NAFTA talks between US and Mexico, Canadian yields and the CAD were supported by a strong GDP print (0.5% QoQ vs. 0.3% expected) but with OIL trading lower this morning, the CAD is starting the Asian session on the back foot.

1.30 proved to be a strong support level for the USDCAD and 1.31 should act as short-term resistance.

 

 

 

Posted by OFX

Risk off as negative US/China trade headlines hit.

OFX Daily Market News

Posted by OFX

  British Pound

GBP/USD drifted lower throughout the day yesterday as the dollar recaptured lost ground from earlier in the week. US stocks recovered a little and US economic data was generally positive, with both Chicago PMI and CB Consumer Confidence beating market expectations. Other than that it was a fairly quiet session in London and New York on Tuesday as GBP traders sit on the sideline ahead of the much anticipated Bank of England rate announcement tomorrow.

We do get some UK economic data today by way of Manufacturing PMI, usually a market moving set of data, but with Super Thursday on the horizon, it might pass without much ado. US employment and manufacturing data is due later in the day, before the US FOMC Statement later on this evening, and in this respect we may see some pressures exerted on the USD.

 

 

 

  United States Dollar

GBP / USD Expected Range: 1.3020 – 1.3210

The USD finished the day broadly stronger yesterday, supported in part by the release of better than expected US economic data. As mentioned above, Chicago PMI beat expectations at 65.5 vs. 62.0 and CB Consumer Confidence printed at 127.4 vs. 126.5. The employment cost index came in a little shy of market expectations and other data including personal spending, personal income and the PCE Price Index came in as expected. US equity markets also recovered slightly and dollar yields fell.

It’s a busy day for US data today too with ADP Non-Farm Employment Change, ISM Manufacturing PMI and the FOMC Statement due. The Fed aren’t expected to raise rates this time around, but are expected to signal potential rate hikes in September and December. Meanwhile the trade war rhetoric rumbles on with rumours and reports circulating that the US are set to propose raising tariffs on $200bn of Chinese imports to 25%. Risk is off as a result, this being mildly supportive of the greenback, so far.

 

 

 

  Euro

GBP / EUR Expected Range: 1.1180 – 1.1280

Like GBP/USD, EUR/USD fell throughout the day on Tuesday as the dollar strengthened across the board. Data wasn’t particularly supportive of the single currency either, being generally mixed; Spanish GDP printed at 0.6% vs. 0.7%, European CPI Flash Estimate printed at 2.1% vs. 2.0% and European Prelim Flash GDP printed at 0.3% vs. 0.4%. A host of European Manufacturing PMIs have just been released too, and like yesterday’s data, it was all a bit mixed, and so not particularly supportive of the euro.

EUR/USD is back below 1.17 this morning as all eyes now turn to US data and the US central bank announcement. The trade story will likely start to take centre stage too.

 

 

 

  Australian Dollar

GBP / AUD Expected Range: 1.7600 – 1.7820

After making good gains through the day yesterday, along with most other commodity currencies, AUD/USD has fallen back overnight as the trade rhetoric takes another negative turn. Headlines around proposed 25% tariffs on Chinese imports into the US has hit risk appetite fairly hard in the last 12 hours or so, with AUD one of the main currencies to suffer.

Depending on how this trade story develops we could see some further weakness in the AUD against a backdrop of a broadly stronger USD. Other than this, the focus for AUD/USD traders will be on US data and the Fed’s interest rate announcement this evening. Australian Trade Balance is also due for release later tonight.

 

 

 

  Canadian Dollar

GBP / CAD Expected Range: 1.6990 – 1.7200

The CAD strengthened yesterday following the release of better than expected Canadian GDP data with the headline number printing at 0.5% vs. expectations for 0.3%. USD/CAD slipped under 1.30 on the news but has since recovered as risk appetite wanes in the face of the negative US/China trade story.

 

 

 

  New Zealand Dollar

GBP / NZD Expected Range: 1.9190 – 1.9330

NZD/USD has gone the same was as AUD/USD – south. The Trump administration is planning to propose a 25% tariff on $200bn of imported Chinese goods after initially setting them at 10%, and the headlines have hit commodity currencies including the NZD and AUD the hardest. The kiwi also suffered at the hands of the release of weaker than expected NZ employment data overnight; the unemployment rate printed at 4.5% vs. expectations for 4.4%, although Employment Change came in slightly better than market forecasts.

 

 

 

Posted by OFX

The USD is trading modestly lower against most of its G10 counterparts

OFX Daily Market News

Posted by OFX

  United States Dollar

The USD is trading modestly lower against most of its G10 counterparts as we go into the North American trading session. Trade risk with NAFTA and China/US trade talks continues to be the dominating theme. US data releases today was mixed with ISM Manufacturing PMI missing target while ADP Non Farm Employment Change coming in better than expected. Focus now shifts to the FOMC statement at 2:00 pm EST today.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2976-1.3033

The CAD is trading in a narrow range today after testing a new multi week high. Domestic data remains supportive as Tuesday’s strong GDP release continue to boost positive sentiment. Market forecast was for an increase of 0.3% and we got 0.5%. The market is now pricing in another rate hike by December.

 

 

 

  Euro

EUR / USD Expected Range: 1.1664 – 1.1700

The EUR fell throughout the day on Tuesday as the dollar strengthened across the board. Data wasn’t particularly supportive of the single currency either, being generally mixed; Spanish GDP printed at 0.6% vs. 0.7%, European CPI Flash Estimate printed at 2.1% vs. 2.0% and European Prelim Flash GDP printed at 0.3% vs. 0.4%. A host of European Manufacturing PMIs from Spain, Italy, France and Germany have just been released too, and like yesterday’s data, it was all a bit mixed, and so not particularly supportive of the euro.

 

 

 

  British Pound

GBP / USD Expected Range: 1.3096-1.3144

GBP drifted lower throughout the day yesterday as the dollar recaptured lost ground from earlier in the week. US stocks recovered a little and US economic data was generally positive, with both Chicago PMI and CB Consumer Confidence beating market expectations. Other than that it was a fairly quiet session in London and New York on Tuesday as GBP traders sit on the sideline ahead of the much anticipated Bank of England rate announcement tomorrow. We did get some UK economic data today by way of Manufacturing PMI, which printed below expectations at 54, and it didn’t make much of an impression on the market mainly because of Super Thursday on the horizon.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7399 – 0.7429

The Australian Dollar opens this morning marginally higher than yesterdays’ open as commodity currencies slightly out-performed in overnight trading. Upside movements were seen after a positive reading for the building sector as new building approvals rebounded in June by 6.4% in seasonally adjusted terms. The Aussie saw initial movements to 0.7425 before oscillating between 0.7405 and 0.7435 during the release of the eagerly anticipated BOJ meeting which saw a more dovish stance than expected. Inflation forecasts were downgraded and with the decision to keep interest rates at record lows for an extended period of time, introducing forward guidance for the first time in their monetary policy report.

The Australian dollar saw overnight highs of 0.7440 before drifting lower into the North American session as United States CB consumer confidence beat expectations.

Looking forward, investors will be focused on this evenings Federal reserve meeting where it is expected rates will remain on hold and currently pricing a 80% of Federal Reverse Governor increasing interest rates in September.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6787 – 0.6821

NZD/USD has gone the same was as AUD/USD – south. The Trump administration is planning to propose a 25% tariff on $200bn of imported Chinese goods after initially setting them at 10%, and the headlines have hit commodity currencies including the NZD and AUD the hardest. The kiwi also suffered at the hands of the release of weaker than expected NZ employment data overnight; the unemployment rate printed at 4.5% vs. expectations for 4.4%, although Employment Change came in slightly better than market forecasts.

 

 

 

Posted by OFX

Aussie range bound as BoJ in Focus

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian dollar offered little to excite investors through trade on Monday maintaining a tight 30 point handle, ignoring broader equity weakness and a general risk off environment. Broader risk sentiment was weighed down by another day of heavy losses across US tech stocks and with little news flow prompting direction the AUD struggled to mount any meaningful extensions towards support or resistance. Edging upward to touch intraday highs at 0.7413 the AUD opens this morning at 0.7407 as attentions turn to key central bank commentaries.

The Bank of Japan meets today amid rumors it will tweak its monetary policy stimulus program. In a bid to ease pressure on its domestic banking sector the BoJ is expected to amend its yield curve controls, a move that could prompt an until in Japanese Government Bond yields, reducing Japanese institutional investors demand for foreign bonds and prompting a re-direction in assets back towards the Yen. While the bank is unlikely to make any wholesale changes to it stimulus program without a caveat of extended accommodative policy across other tools a shift could force a break outside recent ranges and see the AUD test lows at 0.7320.

With little headline data on the domestic docket all eyes are on the BoJ today as the marker for broader direction.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0810 – 1.0910

The New Zealand dollar drifted higher on Monday against a softer Greenback as investors wait for a number of central bank meetings. Japan, US and the UK all meet this week and the outcomes could determine the direction of currencies. The NZD/USD pair closed the Asian session a shade above 68c and touched a high of 0.6834, to close in New York around 0.6825.

On the data front, local economists will be closely watching the release of ANZ Business Confidence. The survey has reported negative confidence for the past nine months, headline business confidence deteriorated further in June and may remain weak in July.

Levels to watch – Support located at 0.6720 and resistance remains located at 0.6860.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7650 – 1.7850

The Great British Pound somewhat bucked the negative trend it had been on in overnight trading, treading water above the 1.31 level. Opening this morning at 1.3133, the Sterling posted a shallow intra-day advance that didn’t quite change have the follow through but nevertheless represented an increase on yesterday’s open.

Support for the Pound came from the domestic economic calendar with UK money figures being released at the London open. The report highlighted a five-month high for mortgage approvals, as well as continued expansion of consumer credit growth. Despite the positive overtones the Cable remained subdued as the Bank of England’s Governor Carney’s comments weight on the market. Governor Carney specifically warns that a disorderly Brexit could be problematic. The Sterling was also assisted in its ascent by a softening USD which lost ground to its counterparts across the board. Overall, the Cable enjoyed a slightly appreciation without breaking out to the upside.

The Great British Pound continues to enjoy a slow domestic calendar to start the week with direction being driven by off-shore forces. Risk trends and US Dollar dynamics continue to drive sentiment around the Pair.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7320 – 0.7430

Major equity indexes in the United States started the day on a weak note and extended their losses as tech-giants continued to suffer sharp losses on disappointing earnings results. The tech-heavy Nasdaq 100 index dropped as much as 1.5% declining for a third-straight session. Netflix erased nearly 5% to lead the losses in the FAANG (Facebook, Amazon, Apple, Netflix, Google) group.

Looking ahead today on the US data front sees the release of the June Personal Consumption Expenditures (PCE) inflation report along with personal income & expenditure figures for the month of June.

From a technical perspective, the US dollar is weaker against all the major pairs overnight. Currently trading against the Australian Dollar (0.7408), Great British Pound (1.3134) and Japanese Yen (11.03). The EUR/USD pair traded within familiar levels and in a limited intraday range of 1.1720. Against the Euro we continue to expect support to hold on moves approaching 1.1660 while now any upward push will likely meet resistance around 1.1720.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6300 – 0.6360

The Euro rose 0.40% to 1.1705 amid broad USD weakness and a strong Swedish GDP number.

Yields in the US spiked less, in relative terms, than other major currencies as the market positioned itself for end of month flows and potential monetary policy changes in Japan and England. The underperformance of US yields weighted on the USD and the EURUSD traded as high as 1.1719.

Support is now standing around the 55-day moving average of 1.1689 while resistance is seen at 1.1720 and then 1.1750.

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9610 – 0.9680

The loonie continued the strengthening started last week, gaining 0.20% versus the USD with USDCAD closing around 1.3033.

The CAD was supported by broad USD weakness and a 2% increase on WTI prices amid potential supply disruptions.

USDCAD traded to a new monthly low of 1.2995, which will now be acting as short-term support. On the upside, resistance is seen between 1.3090/1.31.

 

 

 

Posted by OFX

Dollar softens as global equity markets take a hit

OFX Daily Market News

Posted by OFX

  British Pound

Range bound trading in GBP/USD continued on Monday amid a lack of economic data or any fresh or major political/Brexit headlines. GBP investors are also seemingly taking a cautious approach to trading ahead of Thursday’s Bank of England monetary policy announcement. On this note, the odds of a rate hike on Thursday are priced at around 90%, and a rate hike thereafter (and before the end of the year) at about 12%.

The UK data docket is looking a little light again today so expect the steady range in GBP/USD to ensue, at least during the morning. Attentions this afternoon turn to a plethora of US economic data including Core PCE Price Index m/m, Employment Cost Index q/q, Personal Spending m/m, Personal Income m/m, Chicago PMI and CB Consumer Confidence at which point we may see a bit more movement in GBP/USD.

 

 

 

  United States Dollar

GBP / USD Expected Range: 1.3075 – 1.3185

The dollar continued to weaken through the day yesterday. Major equity indexes in the United States started the day on a weak note too and extended their losses as tech-giants continued to suffer sharp losses on disappointing earnings results. The tech-heavy Nasdaq 100 index dropped as much as 1.5% declining for a third-straight session. Netflix erased nearly 5% to lead the losses in the FAANG (Facebook, Amazon, Apple, Netflix, Google) group.

Looking ahead today on the US data front sees the release of the June Personal Consumption Expenditures (PCE) inflation report along with personal income & expenditure figures for the month of June.

 

 

 

  Euro

GBP / EUR Expected Range: 1.1180 – 1.1250

The Euro rose 0.40% to 1.1705 amid broad USD weakness and a strong Swedish GDP number. Yields in the US spiked less, in relative terms, than other major currencies as the market positioned itself for end of month flows and potential monetary policy changes in Japan and UK. The underperformance of US yields weighed on the USD and the EUR/USD traded as high as 1.1719.

EUR/USD is rallying a bit this morning too, and has pushed as far as 1.1730 this morning, helped on its way by the release of better than expected French Prelim CPI. Later on this morning we get European CPI Flash Estimate, Flash GDP and unemployment.

 

 

 

  Australian Dollar

GBP / AUD Expected Range: 1.7650 – 1.7820

The Australian dollar offered little to excite investors through trade on Monday maintaining a tight 30 point handle, ignoring broader equity weakness and a general risk off environment. Broader risk sentiment was weighed down by another day of heavy losses across US tech stocks and with little news flow prompting direction the AUD struggled to mount any meaningful extensions towards support or resistance. Edging upward to touch intraday highs at 0.7413 the AUD opens this morning at 0.7420 as attentions turn to key central bank commentaries.

On the local data front, Australian Building Approvals printed stronger than expected, which supported the AUD.

 

 

 

  Canadian Dollar

GBP / CAD Expected Range: 1.7070 – 1.7250

The CAD fell overnight following reports that American officials had taken the “highly unusual” step of rejecting Canada’s bid to take part in senior-level NAFTA talks between the U.S. and Mexico later this week. USD/CAD pushed 50+ points higher on the news.

Focus today will turn to Canadian GDP, whilst a series of US data releases may also create some more volatility in USD/CAD.

 

 

 

  New Zealand Dollar

GBP / NZD Expected Range: 1.9190 – 1.9350

Despite the release of weaker than expected NZ data including building permits and an ANZ Business survey, which showed the activity outlook dropping to a 9 year low and business confidence at a 10 year low, the NZD has actually been fairly stable over the last 12/24 hours. Attention now turns to NZ Employment Change and the NZ Unemployment rate, both of which are released at 11:45pm BST today.

 

 

 

Posted by OFX

US Federal Reserve Begins Two Days of Meetings to set Monetary Policy

OFX Daily Market News

Posted by OFX

  United States Dollar

Major equity indexes in the United States started the day on a weak note and extended their losses as tech-giants continued to suffer sharp losses on disappointing earnings results. The tech-heavy Nasdaq 100 index dropped as much as 1.5% declining for a third-straight session. Netflix erased nearly 5% to lead the losses in the FAANG (Facebook, Amazon, Apple, Netflix, Google) group.

Looking ahead today on the US data front sees the release of the June Personal Consumption Expenditures (PCE) inflation report along with personal income & expenditure figures for the month of June all came in at estimates, yet Core Personal Consumption Expenditures missed a 1.9% vs consensus of 2.0%. The FOMC starts two days of meeting in regards to setting monetary policy, market expectations our for the Fed keep interest rates at the current 2.0%.

From a technical perspective, the US dollar is weaker against all the major pairs overnight. Currently trading against the Australian Dollar (0.7408), Great British Pound (1.3134) and Japanese Yen (11.03). The EUR/USD pair traded within familiar levels and in a limited intraday range of 1.1720. Against the Euro, we continue to expect support to hold on moves approaching 1.1660 while now any upward push will likely meet resistance around 1.1720.

 

 

 

  Canadian Dollar

USD / CAD Expected Range: 1.2985 – 1.3087

The loonie yesterday continued its strengthening trend which was started last week on broad USD weakness and a 2% increase in WTI crude oil prices amid potential supply disruptions.

Overnight the loonie was under pressure following reports that American officials had taken the “highly unusual” step of rejecting Canada’s bid to take part in senior-level NAFTA talks between the U.S. and Mexico later this week. USD/CAD pushed 50+ points higher on the news.

This Moring focus was on the release of Canadian May GDP figures. Canadian GDP year over year for May quickened to 2.6% versus estimates of 2.3%, while May month over month saw growth of 0.5% vs estimates of 0.3%. The loonie made gains across the board against is G10 currency counterparts.

 

 

 

  Euro

EUR / USD Expected Range: 1.1700 – 1.1746

The Euro rose 0.40% to 1.1705 amid broad USD weakness and a strong Swedish GDP number. Yields in the US spiked less, in relative terms than other major currencies as the market positioned itself for the end of month flows and potential monetary policy changes in Japan and the UK. The underperformance of US yields weighed on the USD and the EUR/USD traded as high as 1.1719.

EUR/USD is rallying a bit this morning too and has pushed as far as 1.1730 this morning, helped on its way by the release of better than expected French Prelim CPI. Earlier this morning, we received the European CPI Flash Estimate, Flash GDP, and unemployment. Euro CPI expanded higher to 2.6% vs estimates of 2.4%.

 

 

 

  British Pound

GBP / USD Expected Range: 1.3113 – 1.3173

Range-bound trading in GBP/USD continued on Monday amid a lack of economic data or any fresh or major political/Brexit headlines. GBP investors are also seemingly taking a cautious approach to trading ahead of Thursday’s Bank of England monetary policy announcement. On this note, the odds of a rate hike on Thursday are priced at around 90%, and a rate hike thereafter (and before the end of the year) at about 12%.

The UK data docket is looking a little light again today so expect the steady range in GBP/USD to ensure, at least during the morning. Attention turns to a US economic data including Core PCE Price Index m/m, Employment Cost Index q/q, Personal Spending m/m, Personal Income m/m, Chicago PMI and CB Consumer Confidence at which point we may see a bit more movement in GBP/USD and EUR/USD.

 

 

 

  Australian Dollar

AUD / USD Expected Range: 0.7404 – 0.7436

The Australian dollar offered little to excite investors through trade on Monday maintaining a tight 30 point handle, ignoring broader equity weakness and a general risk-off environment. Broader risk sentiment was weighed down by another day of heavy losses across US tech stocks and with little news flow prompting direction the AUD struggled to mount any meaningful extensions towards support or resistance. Edging upward to touch intraday highs at 0.7413 the AUD opens this morning at 0.7407 as attentions turn to key central bank commentaries.

The Bank of Japan meets today amid rumors it will tweak its monetary policy stimulus program. In a bid to ease pressure on its domestic banking sector the BOJ is expected to amend its yield curve controls, a move that could prompt an until in Japanese Government Bond yields, reducing Japanese institutional investors demand foreign bonds and prompting a re-direction in assets back towards the Yen. While the bank is unlikely to make any wholesale changes to its stimulus program without a caveat of extended accommodative policy across other tools a shift could force a break outside recent ranges and see the AUD test lows at 0.7320.

With little headline data on the domestic docket, all eyes are on the BOJ today as the marker for broader direction.

 

 

 

  New Zealand Dollar

NZD / USD Expected Range: 0.6812 – 0.6832

The New Zealand dollar drifted higher on Monday against a softer Greenback as investors wait for a number of central bank meetings. Japan, the US, and the UK all meet this week and the outcomes could determine the direction of currencies. The NZD/USD pair closed the Asian session a shade above 68c and touched a high of 0.6834, to close in New York around 0.6825.

On the data front, local economists will be closely watching the release of ANZ Business Confidence. The survey has reported negative confidence for the past nine months, headline business confidence deteriorated further in June and may remain weak in July.

Levels to watch – Support located at 0.6720 and resistance remains located at 0.6860.

 

 

 

Posted by OFX

Aussie continues to lack traction on moves above 0.74

OFX Daily Market News

Posted by OFX

  Australian Dollar

The Australian Dollar failed to capitalise on broader USD softness Friday again struggling to gain any real traction on moves above 0.74 U.S cents. Attentions were squarely focused on the much-anticipated US Advance GDP print ensuring the AUD remained range bound for much of the domestic session before enjoying a short 30 point jump when data printed below expectations at 4.1%. Touching intraday highs at 0.7412 the AUD edged lower into the close and opens this morning buying 0.7401 U.S Cents.

Despite missing market expectations US GDP presented its strongest quarterly performance in nearly 4 years underpinning recent US strength and adding additional support to calls for 2 further interest rate hikes before year end. While there is a broader concern the US will see the ill effects of trade frictions and suffer a slow down in growth through the second half of the year we expect the AUD will continue to trade heavy and struggle on moves approaching 0.75. The widening gap in monetary policy expectation and the increasing US yield differential are hampering upside momentum and when coupled with the downward pressures plaguing the CNY there is little scope for extended AUD strength through the short and medium term.

Attentions now turn to Thursday’s Trade balance report for domestic direction while Tuesday Bank of Japan policy meeting poses a significant risk event with implications for global bond markets and broader currency flows.

 

 

 

  New Zealand Dollar

AUD / NZD Expected Range: 1.0835 – 1.0930

The New Zealand dollar closed the week lower at 0.6789 against the US Dollar and was stuck in a 1c range only moving between 0.6762 and 0.6850 all week. With little to offer in the way of economic data the New Zealand dollar took its direction from offshore markets. The highly anticipated GDP data was a disappointment for markets and missed consensus growth of 4.2% coming in at 4.1%. It was the strongest quarterly growth rate since 2014, with tax cuts supporting economic growth. GDP growth in Q2 was driven by strength in exports, household consumption, business investment and government spending. Trump was quick to claim the numbers were a great outcome to his policies.

We are likely to see the Kiwi however around the 68c handle today with the domestic calendar being very light. Traders will be eyeing up employment figures due out on Wednesday.

Technical levels to watch, support sitting at 0.6760 with resistance around 0.6850 levels.

 

 

 

  British Pound

GBP / AUD Expected Range: 1.7650 – 1.7850

The Great British Pound enjoyed a reasonably quiet Friday to close out the week, oscillating within a tight range. Opening this morning at 1.3108, the Sterling looks forward to a packed week for direction.

The Cable welcomed a quieter Friday after another precipitous fall on Thursday due to fresh Brexit concerns. Again, the catalyst was concerns of an increasingly likely ‘no-deal’ Brexit. Within this context, the Pound limped along to the close with only a poorer US Q2 GDP figure to marginally support the Sterling.

Despite the slow start to the week, the Great British Pound does look set to enjoy a packed economic calendar to drive direction. The Bank of England are set to release their household borrowing figures shortly and their policy decision on Thursday. UK PMI survey’s are also slated for release on Wednesday.

 

 

 

  United States Dollar

AUD / USD Expected Range: 0.7320 – 0.7430

The Greenback found support on Friday on the back of US President Donald Trump comments hinting a strong US Gross Domestic Product (GDP) figure. The actual GDP number for Q2 growth matched market’s expectations, with the economy up 4.1%, the fastest pace of growth in four years. US trade wars continued to make headlines with US Donald Trump pulling back from imposing tariffs on cars’ imports, and in a joint statement with the EU, both pledged to work together toward zero tariffs.

It’s quite a busy week ahead in the US macroeconomic calendar starting on Tuesday with the June Personal Consumption Expenditures (PCE) inflation report. On Thursday sees the release of the Federal Reserve monetary policy meeting (FOMC Statement). The Federal Reserve is highly unlikely to raise rates at its policy meeting leaving interest rates at 2%. Finally on Friday sees the release of the US Nonfarm Payroll report. The US is expected to have added in July 195K new jobs, the unemployment rate is expected at 3.9% while wages are seen holding within their recent levels, up 0.3% MoM and 2.7% YoY.

From a technical perspective, the US Dollar has opened weaker against the Australian Dollar (0.7402) and the Great British Pound (1.3108). The Greenback is slightly stronger against the Euro (1.1658) but still within familiar levels, at around 1.1660.

 

 

 

  Euro

AUD / EUR Expected Range: 0.6300 – 0.6360

The Euro spiked 0.3% on Friday, to close around 1.1657. EURUSD was trading on the session lows around 1.1625 prior to the US Q2 GDP data. Expectations had been built but the overall number came slightly weaker than expected and the USD dropped against most majors.

EURUSD spiked more than 30 pips on a short period of time and is now opening the Asian session almost flat, just below 1.1660.

This week is setting up to be a very interesting one with Central Bank meetings (Japan, US & England), Eurozone CPI and US manufacturing and inflation gauges. Plus the now usual geopolitical drama

 

 

 

  Canadian Dollar

AUD / CAD Expected Range: 0.9610 – 0.9730

The loonie strengthen marginally on Friday after the US had a slightly lower than expected GDP print. USDCAD dropped 0.15% to close around 1.3055 and the CAD is opening slightly weaker on Asia around 1.3062.

This week will bring back-to-back Central Bank policy meetings from Japan, the US and England which should provide further hints on how well the USD is positioned against other major currencies. We’ll also get GDP and manufacturing PMI data out of Canada.

Keep an eye on the 1.30 and 1.3150 levels which should be acting as support and resistance in the short term.

 

 

 

Posted by OFX

Dollar weakens after weaker than expected GDP print

OFX Daily Market News

Posted by OFX

  British Pound

GBP/USD as confined to a fairly narrow range on Friday, as well as most of the week last week. If anything it trended ever so slightly higher on Friday following the release of weaker than expected USD Q2 GDP and the resulting sell off in the greenback. Like Thursday, there was no UK economic data released.

It’s a pretty quiet start to this week as far as data goes, too. It isn’t until Wednesday that we get UK Manufacturing PMI. Then on Thursday, arguably the most anticipated UK market event of the week/month/quarter falls due; the Bank of England make their monetary policy announcement. Expectations are for the central bank to raise the base rate from 0.5% to 0.75%, and as it’s not fully priced in we’re bound to see some volatility in GBP/USD following the announcement i.e. some upside if the bank hike and some downside if the bank hold, so the theory should go. Investors and traders will also be paying close attention to Governor Carney’s comments following the bank’s interest rate announcement too. If the bank hike, and he sounds dovish on future monetary policy, and upside in GBP/USD may be limited. If they don’t hike, and he takes a similarly dovish stance, then there’s a chance we may see a move on the 1.30 big figure. So the risk is to the downside, as they say.

 

 

 

  United States Dollar

GBP / USD Expected Range: 1.3075 – 1.3165

The dollar weakened on Friday following the release of slightly weaker than expected US Q2 GDP data. The headline printed at 4.1% vs. forecasts for 4.2%, so only just shy of predictions. And even though it was the fastest pace of growth in four years traders were perhaps left a little underwhelmed after President Trump hinted at a bigger number earlier in the day. The Facebook stock headlines from last week probably didn’t help the greenback’s cause either. Disastrous second Q2 results triggered a fall in its stock-market valuation of almost $120bn, with the company telling investors that user growth had slowed in the wake of the Cambridge Analytica scancal.

Turning to this week, it’s quite a busy one for the US macroeconomic calendar starting on Tuesday with June Personal Consumption Expenditures (PCE) inflation report. ON Thursday we get the FOMC Statement, albeit the Fed is highly unlikely to raise rates. Finally on Friday the US Nonfarm Payroll report is released. The US is expected to have added 195K new jobs in July while the unemployment rate is expected to print at 3.9%.

 

 

 

  Euro

GBP / EUR Expected Range: 1.1220 – 1.1290

The Euro spiked 0.3% on Friday, to close around 1.1657. EUR/USD was trading at session lows, around 1.1625, prior to the US Q2 GDP data. The overall number came in slightly weaker than expected and the USD dropped against most majors, including the euro.

EUR/USD is rallying a bit this morning, although it hasn’t yet been able to break through 1.17. Stronger than expected German regional inflation data released earlier this morning is no doubt behind the move. Further inflation, European prelim CPI and Flash GDP estimates are due to trickle through over the next 24-48 hours too.

 

 

 

  Australian Dollar

GBP / AUD Expected Range: 1.7650 – 1.7820

The Australian Dollar failed to capitalise on broader USD softness Friday, again struggling to gain any real traction on move above 0.74 U.S cents. Attentions were squarely focused on the much-anticipated US Advance GDP print, ensuring the AUD remained range bound for much of the domestic session before enjoying a short 30 point jump when data printed below expectations at 4.1%. Touching intraday highs at 0.7412 the AUD edged lower into the close and opens this morning buying 0.7401 U.S Cents.

Despite missing market expectations US GDP presented its strongest quarterly performance in nearly 4 years underpinning recent US strength and adding additional support to calls for 2 further interest rate hikes before year end. While there is a broader concern the US will see the ill effects of trade frictions and suffer a slowdown in growth through the second half of the year we expect the AUD will continue to trade heavy and struggle on moves approaching 0.75. The widening gap in monetary policy expectation and the increasing US yield differential are hampering upside momentum and when coupled with the downward pressures plaguing the CNY there is little scope for extended AUD strength through the short and medium term.

Attentions now turn to Thursday’s Trade balance report for domestic direction while Tuesday’s Bank of Japan policy meeting poses a significant risk event with implications for global bond markets and broader currency flows.

 

 

 

  Canadian Dollar

GBP / CAD Expected Range: 1.7070 – 1.7250

The loonie strengthen marginally on Friday after the US GDP print. USD/CAD dropped 0.15% to close around 1.3055.

This week will bring back-to-back central bank policy meetings from Japan, the US and UK, which should provide further hints on how well the USD is positioned against other major currencies. We’ll also get GDP and manufacturing PMI data out of Canada. Keep an eye on the 1.30 and 1.3150 levels which should be acting as support and resistance in the short term.

 

 

 

  New Zealand Dollar

GBP / NZD Expected Range: 1.9190 – 1.9350

The New Zealand dollar closed the week lower at 0.6789 against the US Dollar and was stuck in a 1c range all week last week, only moving between 0.6762 and 0.6850. With little to offer in the way of economic data, the NZD took its direction from events in offshore markets. We are likely to see the kiwi hover around the 68c handle today with the domestic calendar being very light. Traders will be eyeing up employment figures due out on Wednesday. Technical levels to watch, support sitting at 0.6760 with resistance around 0.6850 levels.

 

 

 

Posted by OFX

President Trump, EU President Juncker strike deal, NAFTA negotiations resurface

OFX Daily Market News

Posted by OFX

  United States Dollar

The United States Dollar began last week on road to recovery as demand for the greenback returned to the market. The catalyst for the reversal of fortunes, albeit small, was the upbeat data from the Federal Reserve Bank of Chicago which showed the National Activity Index rose to 0.43 in June. However, the good news was significantly counter-balanced by a 0.6% reduction in existing home sales.

The excellent start continued for the Greenback, however, as commodity currencies began to depreciate against the USD when China announced it would inject $74b of liquidity into the market, further easing their accommodative monetary policy. The CNY immediately plunged 0.4% which contributed to declines across the board for commodity currencies.

The big headline last week came out of Europe this time with conciliatory comments from President Trump after his press conference with EU President Juncker. While the comments by both presidents after the meeting were vague and unhelpful, a halt on tariff implementation is nevertheless more than the market expected. The positive market sentiment saw equity markets and the EUR appreciate significantly initially, although these were both later reversed due to unrelated announcements. Nevertheless, positivity returned to the market which led to a modest recovery for the Greenback, close out the week near the 0.8580 mark.

 

 

 

  Canadian Dollar

With a very light week on the economic data front for Canada, market participants paid close attention last week to resuming NAFTA negotiations. Foreign Affairs Minister Chrystina Freeland visited Mexico with outgoing and incoming counterparts after talks were stalled for the July 1st Mexican Presidential elections. Trump has threatened to scrap NAFTA and put together singular deals for Canada and Mexico, also saying that he would prioritize a Mexican agreement first.

Mid-week the loonie benefited from a US dollar sell-off which was also bolstered by rising crude oil prices. WTI pushed back towards $70 a barrel for the first time in seven days providing the loonie a tailwind.

To close the week, we saw the loonie was trading at the highest level in a month versus the USD, around 1.3030, but couldn’t hold onto gains despite comments by US Trade Representative Robert Lighthizer around NAFTA and the possibility of reaching a tentative accord next month. USD/CAD closed the week at 1.3053.

 

 

 

  Euro

As we near August, we get closer to what is typically a quiet period for the Eurozone as traders and business’ take time off and head to the beach for a break.

Last week’s main event, which turned out to be a non-event, was the European Central Bank interest rate decision, keeping rates unchanged, as expected, and reiterating the pledge to keep them flat until mid-2019. No change of policy was almost guaranteed, so the markets primary focus was on the comments of ECB chief, Mario Draghi’s, held at a press conference 45 mins after the release. To summarize, Draghi sounded fairly upbeat in his accompanying presser and despite the risk of a trade war, the ECB president said that the latest data indicated the region was “proceeding along a solid and broad-based growth path”.

In other EUR data, the monthly tranche of PMIs has been released with a mixed bag of results being shown. The Eurozone’s purple patch of expansion seen late last year has been replaced with a more modest pace of output of late highlighted by the reduction in PMI figures. German manufacturing for July printed 57.3 beating expectations but some way off the series of >60 readings we saw either side of Christmas. Eurozone Manufacturing as a whole came in at 55.1 ahead of the 54.7 forecast. The EZ Services number printed 54.4 slightly worse than the 55.0 predicted.

 

 

 

  British Pound

Sterling has been under pressure of late as political concerns re: Brexit weigh on the currency with political in-fighting and high profile resignations in PM, Theresa May’s cabinet, however, it was a fairly quiet start to last week from the pound’s perspective.

There was no top-tier UK data to begin the earlier sessions, however, one piece of news to catch sterling holder’s eyes was at a forum in Liverpool where Bank of England Deputy Governor, Ben Broadbent stated he hadn’t decided on whether to vote for a rate hike next week. Broadbent is seen as a dove amongst the Monetary Policy Committee so it could be seen as a hawkish signal that he’s contemplating voting to raise rates. Chances of a hike are around 80% currently.

Another small crumb of comfort may be reports that UK PM, Theresa May is set to take charge of Brexit negotiations going forward. With former Brexit Secretary, David Davis resigning in the wake of the new plan for future trade/customs being revealed it appears the PM will be taking a more assertive role alongside new Brexit Secretary, Dominic Raab. We could see a (very) limited recovery in sterling over the next six weeks as parliament has its summer break and Brexit news thins out a little however we are now only three months before a future trade/customs plan is meant to have been thrashed out by so it could only be a temporary reprieve.

 

 

 

  Australian Dollar

Having opened a shade above 74c at the start of last week, the Australian Dollar came under selling pressure as the Asian session kicked into full swing. The AUD/USD touched a low of 0.7373 against the US Dollar and with little local data the Aussie remained centred on Chinese currency developments. China’s central bank injected 502 billion Yuan to financial instructions via its one-year medium-term lending facility (MLF) with rates unchanged, a move which was totally unexpected by the market.

Weighing further on the Aussie was U.S data released by the Federal Reserve Bank of Chicago. The National Activity Index boosted by the upbeat production-related indicators jumped up to 0.43 in June from -0.45 in May a move that pushed the US Dollar index higher. On the commodity front, oil, gold and base metal prices were all a tad lower.

Mid-week saw the release of Australian CPI figures, with headline inflation remaining flat at 0.4% q/q which was below expectations and shifted just into the RBA’s target range of 2-3% at 2.1% y/y. Additional, the trimmed mean CPI, which is the RBA’s preferred measure, edged down 0.5% q/q while was on a y/y basis at 1.9% y/y. Market pricing is implying that the cash rate will remain unchanged for a considerable period of time, with a less than 50% chance of a hike in the next 12 months.

To close out the week, Australian Import Prices increased at a faster-than-expected pace in the three months ending June. The import price index climbed 3.2 percent sequentially in the second quarter, faster than the 2.0 percent rise in the first quarter. It was the third consecutive quarterly increase and above the 1.9 percent rise economists had forecast. The increase was driven by higher prices paid for petroleum, petroleum products and related materials, general industrial machinery, electrical machinery, apparatus and appliances. On a yearly basis, imports prices grew at a faster rate of 6.0 percent in the June quarter, after a 2.6 percent gain in the March quarter. Data also revealed that export prices grew 1.9 percent quarterly and by 6.6 percent yearly in the June quarter.

 

 

 

  New Zealand Dollar

The New Zealand Dollar gave up gains enjoyed into last weeks opening sessions as deeper depreciations in the CNY weighed on the unit.

Despite reasonable and improving domestic economic performance, New Zealand’s exposure to a global slowdown, in particular, the Chinese value chain has driven the Kiwi to record short positions and been a primary catalyst for the renewed downside. However recent strength across commodity prices has helped firm support on moves toward 12 month low and 0.67.

Mide-week, the Kiwi shook off a softer than anticipated trade balance print and found support through Wednesday’s sessions as the embattle Chinese Yuan edged marginally higher while trade talks between the US and Europe appear to have eased tensions and fears for an all-out trade war. President Trump and EU President Juncker met in Washington with both sides allowing concessions in an agreement that is hoped will ease trade barriers.

The impromptu press conference helped ease concerns linked to an escalating trade war and fostered a short-term upward run on commodity currencies. The Kiwi however then gave up gains as investors expect Trump attentions to return to US-Sino trade hostilities. As the tariff battle between the US and China continues and the CNY remains under pressure the upside demand for the NZD will likely be short.

 

 

 

Posted by OFX