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Aussies slips further as oil hits 7 month low and Greenback gains consolidated

BY MATT RICHARDSON

The Australian Dollar has retreated against the U.S Dollar and is currently changing hands at 0.7553 at the time of writing. Having moved off a high of 0.7582 in early Asian trade, the local unit inched lower throughout the global session to touch an eventual low of 0.7541. Yesterday saw the release of low tier macroeconomic data which did very little to the AUD/USD pair. The Westpac-Melbourne Institute Leading Index reported the growth rate slowed from 1.01% in April to 0.62% in May, despite still being above trend two major components have driven the slowdown – commodity prices and the yield spread. As we eased into the U.S session, the Australian Dollar remained on the back foot as Existing U.S homes sales unexpectedly rose in May when a decline of 0.5% was expected.

The New Zealand Dollar offered little through trading yesterday polling between 0.7204 and 0.7250 ahead of the RBNZ Official Cash Rate announcement. As widely expected, the RBNZ chose to hold the rate today at 1.75, however they also released a slightly more hawkish statement leading to a small rally upwards to 0.724. Against the Kiwi’s other major counterparts, the NZD/AUD rose slightly to 0.9587 and the NZD/GBP rallied to 0.5713. With little else on the economic calendar for the week, the NZD looks to offshore risks and events for direction.

The Great British Pound advanced against the US Dollar overnight. It was a wild session for the Pound Sterling against the greenback, initially falling to a 2-month low of 1.2589, before reaching a high of 1.2709. The rally in the Sterling was led by hawkish comments coming from Bank of England’s Chief Economist Andy Haldane who said he is ready to vote for a rate hike amid rising inflation. Andy Haldane's comments came as "a major surprise" as the Bank of England Chief Economist has long been a known dove. The GBP/USD pair is currently trading at 1.2670. We now expect support to hold on moves approaching 1.2630 while any upward push will likely meet resistance around 1.2690.

The U.S Dollar appeared to consolidate through trade on Wednesday shifting sideways and banking gains earner through Monday and Tuesday. Renewed appetite for risk and a heightened expectation the Fed will indeed follow through and raise interest rates again this year has prompted a shift away from the heavily bearish sentiment that plagued the worlds base currency through March, April and May. Commentary from Fed officials has bolstered markets and when combined with promises of tax reform from top White House Republicans a resurgence in the dollar may be forming. The Greenback touched intraday highs at 111.70 against the Yen while the dollar index hovered near one month highs and the Euro struggled to break back above 1.12. Attentions now turn to unemployment claims and labour market data for direction through trade on Thursday.