Daily Currency Update

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Dollar Lower on Political Tensions

By JOEL HOLMES

Having peaked at 0.7476 in early Asian trade the Australian Dollar drifted lower during yesterday’s local session influenced by weaker commodity prices. Crude oil fell nearly 3% on news that Libyan output was recovering which fuelled concerns that the OPEC-led output cuts are being undermined by countries that are excluded from the deal. Iron ore also lower with growing concerns over the outlook for the demand in China. As the European market and US markets opened the Aussie continued to be dragged lower to touch an eventual low of 0.7424. The Aussie is still trending down, with the primary focus for markets today is Private Capital Expenditure as they could provide a clue to the first quarter GDP figures due on June 7, it is expected to rise 0.8% q/q. Retail Sales equally important following two consecutive months of falls in February and March, forecast is a rise by 0.3% m/m in April.

The New Zealand dollar offered little through trade on Wednesday bouncing about a 40-point range having touched intraday highs at 0.7120. With little of note coming from the RBNZ financial stability review the Kiwi continues to butt its head against key technical resistance handles and was the best performing major currency throughout May. A renewed appetite for risk and stability across dairy prices coupled with wider greenback weakness has helped bolster NZD demand, however extended upside gains may slow as resistance at 0.71 encourages profit taking and perhaps signals a marginal downward correction is at hand leading into quarter three. Attentions today turn to U.S preliminary payroll data as a key marker for direction. 

The New Zealand dollar offered little through trade on Wednesday bouncing about a 40-point range having touched intraday highs at 0.7120. With little of note coming from the RBNZ financial stability review the Kiwi continues to butt its head against key technical resistance handles and was the best performing major currency throughout May. A renewed appetite for risk and stability across dairy prices coupled with wider greenback weakness has helped bolster NZD demand, however extended upside gains may slow as resistance at 0.71 encourages profit taking and perhaps signals a marginal downward correction is at hand leading into quarter three. Attentions today turn to U.S preliminary payroll data as a key marker for direction. 

 Markets were once again light on in volatility in the lead up to the ADP Non-Farm Employment reading this evening. The US dollar saw further drops against a basket of major currencies as the DXY fell 0.32% for the day. The Dollar index ended the month more than 5% lower as hope fades on the Trump administration pro-growth economic policies. Beige Book was released overnight as the US economy expanded at a modest to moderate pace through May with few signs of inflation pressures. Oil was crushed again, falling closing to 3% for the day, hindering any upside movements by so called commodity currencies. Equities remained flat globally. EUR/USD was close to May highs as we saw an intraday high of 1.1250. Euro core inflation came in weaker at 1.4% on an annualised basis, supporting Mario Draghi to keep its current tapering program in action. USD/JPY drifted lower as movements were seen back into the Yen in safe haven bids, moving below the 111.00 handle to a low of 110.50 overnight.