Daily Currency Update

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All eyes on RBA decision

By BRETT OTTAWA

Starting the new week in a buoyant mood the Australian dollar remained well supported when valued against its US Counterpart on Monday with the worlds reserve currency very much struggling in the context of a cautious global backdrop. Trading as high as 0.7498 yesterday, falling oil and US equity prices did the majority of the damage as the Aussie tracked incrementally higher during overnight trade. In what’s shaping as a week littered with key risk events, policy makers are set to keep interest rates on hold when they meet today as broader measures of economic growth remain weak. Opening stronger this morning the Australian dollar currently buys 74.82 US Cents. 

The Great British Pound has regained losses sustained under the 1.2900 handle as the market turns its attention to this week’s UK snap election. Despite a disappointing UK Services PMI release for the month of May, Sterling was little moved early on in European trading. Sterling then advanced to a 10-day high of 1.2940 as opinion polls suggest a Conservative Party victory on Thursday evening. With regular opinion polls in the lead up to this week’s snap elections, it is expected to be a volatile week for the Sterling as it drifted off to test the 1.2900 handle on open this morning. The Sterling opens lower against the Australian dollar 1.7230 and steady at 1.8080 against the New Zealand Dollar. 

We’ve seen a fairly benign overnight session following the public holiday with most of the price action centred on softer employment data on Friday. Following the disappointing employment numbers in the US, The NZD broke through resistance at 0.71 to reach a 3 month high at 0.7149. Currently trading at 0.7134, the Kiwi looks to this weeks’ Global Dairy Trade Auction for domestic direction and this afternoons RBA statement for the Aussie cross rate.

On the back of a public holiday in some European countries yesterday the US dollar traded within limited range all through Monday. The EUR/USD pair ended the day marginally lower trading at 1.1234, slightly weaker than last week’s high of 1.1284. The EUR/USD pair is currently trading at 1.1258 and attentions now turn to next week’s ECB monetary policy meeting. The British Pound broke through the 1.2900 level overnight reaching a high of 1.2940 before settling around 1.2906. There are no major data releases scheduled before the upcoming UK elections. In Japan, there were no data releases yesterday. Another quiet day ahead with again no data releases scheduled. The JPY/USD pair is currency trading at 110.46. We now expect support to hold on moves approaching 110.20 while any upward push will likely meet resistance around 110.85.