Daily Currency Update

 

The Australian Dollar again maintained a relatively tight trading band throughout Wednesday bouncing between support and resistance as investors focus was drawn to US political uncertainties. With little macroeconomic data on hand the AUD found support in a sustained commodities uptick and wide spread USD weakness. Suggestions President Trump tried to press dismissed FBI chief James Comey to end investigations into relations between Russia and subsequently interfering in a federal investigation raised concerns the Republican will be forced from office well before his 4-year tenure expires. The threat of impeachment saw investors flock to safe haven assets and marked a significant USD sell off allowing the AUD to touch intraday highs at 0.7443. Attentions now turn to domestic labour market data with unemployment expected to hold at 5.9% amid modest gains in job creation numbers. A poor print may force the AUD lower however direction again will be largely driven by U.S political developments.

The Great British Pound is stronger today when valued against its US counterpart. Despite ending the day higher against the Greenback, the British Pound failed again to hit 1.3000, reaching an overnight high of 1.2990. Yesterday on the data front, the unemployment rate fell to 4.6% in the three months to March, the lowest in over four decades. Looking ahead today will see the release of April retail sales with expectations of an increase by 1.0% in the month after March's 1.8% decline. The GBP/USD pair is currently trading at 1.2970. We now expect support to hold on moves approaching 1.2900 while any upward push will likely meet resistance around 1.2995.

It was a relatively quiet session on domestic markets yesterday as the New Zealand dollar traded in a tight twenty-point range between 0.6880 and key resistance levels at the 0.6900 handle. The New Zealand March quarter reading for PPI was higher than expected as producer prices continue to climb. This was due to higher prices in dairy products and crude oil but this did little to move the Kiwi on release. Most movements in the NZD were in the North American session as political unrest took place once again in the United States. Equities were sold off, along with the US Dollar with the NZD/USD being one of the main beneficiaries hitting an overnight high of 0.6945. This morning these levels are being tested as the New Zealand dollar opens at 0.6940.

The Greenback has extended further losses on the currency front when valued against its major counterparts. The US Dollar Index which measures the USD’s strength against a trade-weighted basket of six currencies closed at 97.39 and down 0.80% - a fresh six-month low. The US Dollar has come under pressure after news broke that President Trump has asked former FBI Director James Comey to end the agency’s investigation into ties between former White house national security advisor and Russia. EUR/USD has benefited, moving towards an eventual high of 1.1170 also assisted by weaker US housing data and odds for a June rate hike dropping further according the CME’s FedWatch Tool. In a separate note Japanese Machine Orders were less than expected rising 1.4% in March vs an increase of 2.6%, despite the data raising concerns about the outlook for Japanese business investment USD/JPY has weakened further touching a three-week low.