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Australian Dollar moves notably higher

By BRETT OTTAWA

Attracting substantial interest the Australian Dollar tracked notably higher intraday yesterday. Reaching an eventual one-month peak of 0.7566 when valued against its US Counterpart, demand was spurred by a GDP reading from the ABS which showed Australia’s economy had grown by 0.3 percent over the first three months of this year. Whilst a marked slow-down from the 1.1 percent recorded during the final quarter of 2016, near-term fears that the Australian economy was tracking towards recessionary territory have been side-lined, at least for the time-being. Given the softness of the Greenback which has offered additional support, the Australian dollar has been on a tear over the past 24 hours, opening 0.5 % higher a rate of 0.7549.   

The Great British Pound rose to its highest level in two-weeks as the latest polls see the Conservative party leading the race against Labour in the upcoming British election. According to a YouGov poll the gap vs Labour is still very close and claims of a hung parliament is unsettling for the Sterling at the present time. The GBP/USD also referred to as the ‘Cable’ moved from levels of 1.2887 through 1.29 to touch an eventual high of 1.2966. Today’s vote marks a historical event as not only will it determine who will lead the UK through the next five years but also who will oversee the Brexit. With the approach of key risk events in the UK and the US with Former FBI Director Comey set to testify before the senate, markets will be closely watching Thursdays events unfold. 

Overnight, the Kiwi has moved sideways against the greenback, unable to hold on above 0.72. Trading slightly lower today at 0.7194, the Kiwi has continued to bounce off resistance at 0.72 despite a general USD softening. Traders now turn to Former Director Comey’s first senate testimony for a potential catalyst in the NZD/USD. Meanwhile, the Kiwi rose to a 6 week high against the euro ahead of a pivotal ECB meeting which may mark the end of European Central Bank’s accommodative monetary policy stance. Currently trading at 0.6389, the NZD earlier touched as high as 0.6422. Across the Tasman,  the NZD fell after the Australian GDP release and has since been range bound between 0.9510-0.9540. With Australian and Chinese Trade Balance numbers released today, further direction could be derived for the NZD/AUD cross rate. 

The US dollar has lost more than 1.5% against the Japanese Yen so far this week, weighed down by a sharp drop in US Treasury yields. The JPY/USD pair is currency trading at 109.36. We now expect support to hold on moves approaching 109.40 while any upward push will likely meet resistance around 110.20. On the data front, yesterday Japanese leading index declined to a five-month low in April according to preliminary estimates down to 104.5 from previous 105.7 in March. Looking ahead today all eyes will be on the Japanese final Q1 GDP figures, with expectations for a quarterly growth of 0.6% up from an initial estimate of 0.5%. The EUR/USD pair closed marginally lower 1.1256 while the GBP/USD pair rose to an overnight high of 1.2966.