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Dollar steady as key markets closed for holidays

By JOEL HOLMES

The Australian Dollar barely moved yesterday, with markets in the U.S, the U.K and China closed observing public holidays the local unit has been confined between a low of 0.7426 and a high of 0.7450. Markets ignored news of a third missile test within three weeks by North Korea which landed in the sea between Korea and Japan.  With recent local economic indicators being mixed it has raised some concerns on the strength of the Australian economy and therefore all eyes will be closely watching Building Approvals due out later this morning. The forecast is to rise by 3% in April  following a large drop on 13.4% in March. On the technical side, the charts are indicating a lower trend, if the pair holds above 0.7423, the near-term resistance sits at 0.7484. However, failing this the pair could grind lower to 0.7400.

The Great British Pound steadied through trade on Monday having found support following Fridays bout of heavy selling. As most Britons enjoyed an extended weekend in observance of the Spring Bank Holiday volumes remained thin yet with little macroeconomic data to drive direction volatility did little influence traders and Sterling edged marginally higher. Weekend polls showed Prime Minister May will win next week’s election however concessions will need to be made amongst those expecting a landslide victory. The trend through the past two weeks has seen the Conservatives lead narrowed and while the Prime Minister can be confident in returning to Downing street the majority she hoped to gain in the house and commons is unlikely to eventuate making Brexit negotiations that much harder. Attentions today remain with electoral expectations for direction as the macroeconomic docket remains free of headline data sets.

With the bank holiday in the US yesterday trading was relatively subdued. The New Zealand Dollar opened slightly weaker when values against its US counterpart currently trading at 0.7044. We now expect support to hold on moves approaching 0.7015 while any upward push will likely meet resistance around 0.7097. The Kiwi touched a three-week high against the euro overnight after European Central Bank President Mario Draghi said the European region still requires more stimulatory monetary policy. The NZD/EUR currency pair is currently trading at 0.6326. On the economic data front, today all eyes will be on Building Consents for the month of April. It's a leading gauge of future construction activity.

It was a light on trading day for the start of the week as United States, United Kingdom and China all observed public holidays. On low liquidity, there was little movement on currency markets as the US Dollar index saw one of its tightest trading range this year and up 0.05% for the day. This week sees key macroeconomic data out of the United States with CB Consumer spending this evening. On Friday Non-Farm Employment is released for May, which could give further influence to the Feds upcoming monetary decision in June. Fed reserve member John Williams reconfirmed his view in his speech yesterday in Singapore that three interest rate hikes currently makes sense for the US economy. EUR/USD was steady overnight hitting an intraday high of 1.1190 before news out of German press – Bild early this morning without citing sources, that the Greek government is possibility looking to go without bailout payment should creditors not agree on debt relief. This sent the cross immediately lower to 1.1135. USD/JPY was steady overnight and sits at 111.20 ahead of Japanese retail sales and its unemployment rate released this morning for the month of April.