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Aussie holding on above support as attentions shift to US inflation data

BY MATT RICHARDSON

The Australian Dollar opened this morning little changed when valued against its US Counterpart with the pair retreating from an overnight high of 0.7382. The Aussie still unable to reach the 0.7400 level. There were no local data releases yesterday, and the macroeconomic calendar will remain empty again today, leaving the AUD/USD pair to take further direction from both the commodities and equities markets. The AUD/USD pair is currently trading at 0.7373. We now expect support to hold on moves approaching 0.7340 while any upward push will likely meet resistance around 0.7395. One Australian Dollar currently buys 67.86 Euro cents and 57.21 British pounds. 

The New Zealand dollar suffered a heavy sell off through trade on Thursday following the RBNZ’s rate announcement. Investors held a reasonable expectation the RBNZ may move toward a tighter monetary policy platform through the second half of 2017 and a shift away from its current neutral policy stance. Comments from RBNZ Governor Wheeler and a suggestion soft wage growth and sluggish inflation will extend the existing policy manifesto into the foreseeable future forces a sharp correction in NZD expectations. Touching near 12 month lows the NZD neared critical support points at 0.6830. Having edged marginally higher into the close the NZD currently buys 0.6845 U.S cents with attentions turned to key U.S macroeconomic indicators. A consolidated break below 0.6830 may open moves toward 0.6690/67.

The Great British Pound has moved lower overnight after trading in a tight range during the Asian session. Starting European trade just below 1.2950, the GBP/USD cross dropped to 1.2910 after disappointing manufacturing production figures for the month of March. The BoE kept benchmark interest rates at record lows of 0.25%, setting a mildly hawkish tone, though market participants are not pricing a rate rise till after Brexit in 2019. Furthermore, the Sterling was hit hardest as growth forecasts were trimmed for 2017 and only the one MPC member voted for an interest rate rise in a 7-1 vote to leave rates unchanged. The immediate reaction was a drop in the Pound as it fell through the 1.2900 handle and seeing an intraday low of 1.2850. The Sterling has recovered some of its losses overnight and opens this morning at 1.2890.

The US dollar rally stalled through trade on Thursday as investors took stock and consolidated recent gains. Edging marginally lower against both the Japanese Yen and Euro investors paused amid concerns of further fall out regarding President Trumps’ sacking of FBI director James Comey and suggestions the greenback rally may have been over prescribed. Day-to-day macroeconomic markers have been widely variant throughout the last 8 weeks with a lacklustre performance through March overshadowed by an apparent rebound through April. The mixture of upbeat and soft economic performances, while far from derailing bullish sentiment, has forced investors to the sideline wary of extending gains ahead of the Fed June rate announcement. The dollar opens this morning having slipped back below 114 JPY while the Euro remains largely unchanged buying 1.0860 U.S. cents. Attentions now turn to a raft of key indicators with Inflation CPI and retail sales driving direction into the weekend.