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Positive Data Strengthens US Dollar

By JOEL HOLMES

The Australian Dollar sell off continued through trade on Thursday as the commodity driven unit eased back below 0.74 U.S cents. Having touched intraday highs at 0.7453 following stronger than anticipated retail sales growth the Aussie plunged as iron ore prices moved lower and expectations for growth throughout the first 6 months of 2017 waned. Testing support the AUD dipped lower still, despite an uptick in oil prices, as a string of stronger than expected U.S macroeconomic data sets and an uptick in US equities helped fuel support for the USD. Preliminary non-farm payroll numbers and manufacturing improved throughout May forcing the Australian dollar to touch intraday lows at 0.7373. Attentions now turn to critical U.S wage growth and labour market data as directional markers into the weekly close. 

The Great British Pound enjoyed a relatively quiet trading session Thursday free from the wide variants seen throughout the past fortnight as the correlation with election expectations eased. Sterling bounced off intraday lows at 1.2830 to touch session highs at 1.2910 on steady growth across manufacturing sectors. As investors attentions turn to next week’s general election ongoing opinion polls will likely influence direction with analysts reluctant to commit to either side of trades while the wider race remains so broadly open.

The New Zealand Dollar is weaker this morning when traded against its US counterpart. The Kiwi hit a 24-hours low of 1.0434 on the back of a stronger US labour market. Overnight in the US the ADP Non-Farm employment survey showed 253,000 jobs were added in May, compared to a forecast 174,000, boosting speculation the official non-farm payrolls data tonight will also be strong. The NZD/USD pair is currently trading at 0.7064. We now expect support to hold on moves approaching 0.7015 while any upward push will likely meet resistance around 0.7097. The Kiwi however extended its gains against the Aussie overnight off weaker iron ore prices and a drop in Chinese manufacturing activity. The AUD/NZD pair is currently trading at 1.0441 (0.9577). On the local data front, there are no economic data releases due out today.

The US Dollar was stronger overnight following strong leads from a number of domestic macro releases. The U.S. ADP Non-Farm Employment report showed a gain of 253,000 jobs, and a positive number on Manufacturing PMI as the industry continues at a solid pace of expansion. Despite a rise in US jobless claims for the month, the DXY was higher by 0.25% and advanced through 97.00. Interest rate futures have climbed to a 96% chance of a hike in the lead up to next months Fed Reserve meeting, as Fed Governor Powell overnight has continued to support hikes this year despite waning inflation. EUR/USD pulled back on general greenback strength but remains firmly above the 1.1200 handle. Top ranking officials in Germany have urged the ECB to start reducing its current monetary stimulus ahead of June 8th meeting with a possibility of easing bias tones removed. USD/JPY has paired yesterday’s losses, squaring up to 111.40 ahead of Non-Farm Employment data this evening.