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Aussie slips on softer retail sales as Greenback gathers momentum

BY MATT RICHARDSON

The Australian Dollar closed the session lower when valued against its US counterpart trading at an overnight low of 0.7329. Yesterday saw the release of March Retail Sales that came in well below market expectations. Sales figures fell by 0.1% in the month of March, against expectations of a 0.3% increase. There are no scheduled releases today. Attentions now turn to Thursdays release Melbourne Institute Inflation Expectations for the month of March. The AUD/USD pair is currently trading at 0.7346. We now expect support to hold on moves approaching 0.7320 while any upward push will likely meet resistance around 0.7385.

The New Zealand Dollar began a slow decent against the US Dollar intraday yesterday moving from a high of 0.6926 to reach a low of 0.6880 just before the Asian markets closed. While expectations of a Federal Reserve June rate hike where back on the table an improvement in risk appetite boosted the Greenback. The NZD/USD seesawed overnight to close back under 69c again. Tomorrow sees the release of the RBNZ cash rate and monetary policy statement, in its more recent policy meeting the central bank reiterated its neutral stance on monetary policy and did welcome a downward adjustment in the kiwi exchange rate. Markets are expected the bank to hold again at 1.75%. 

 

The Great British Pound was relatively stable over the past 24 hours as the GBP/USD cross hit an intraday high of 1.2960. The BRC Retail sales monitor release during the Asian session saw a gain of 5.6% from the same period in 2016. Cable came under some selling pressure during the European session, eventually bounce off critical support levels at the 1.2900 handle. Losses were paired in early morning trading and opens at 1.2950 against the US dollar. Sterling opens higher against the Australian dollar – 1.7620 and New Zealand Dollar – 1.8770.

The US dollar continued to recoup losses suffered in the wake of the French election touching two month highs against the Yen and forcing the 19 nation combined unit back below 1.09. Renewed demand for risk and shift in attentions back to underlying fundamentals and monetary policy expectations helped drive support for the world’s base currency. The dollar was bolstered by a jump in benchmark treasury yields and a further jump in interest rate expectations. With 90% of the market now pricing in a June rate hike an improves yield advantage has prompted investors to sell down Euro and Yen holdings on speculation the respective central banks are unlikely to dampen their own accommodative monetary policy platforms in the short to medium term. The Euro touched intraday lows at 1.0864 and could be poised for s deeper downward correction if volatility returns while the USD broke through 114 JPY. Upside momentum against the Yen is gathering as the gap in central bank policies is drawn into focus again with a move toward March highs at 115.50 at back on the table. Attentions today turn to ECB President Mario Draghi ahead of Friday’s all important U.S inflation reports.