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Australian Dollar falls again overnight

BY BRETT OTTAWA

With US equities and the US Dollar rising through the overnight session, the Australian dollar has consistently looked weaker in most past this week. Struggling to find any major areas of support up above the 76 US Cents mark, highs of 0.7632 proved relatively short-lived as investors favoured the worlds reserve currency. Spurred by an additional confirmation from the FOMC overnight that further rate hikes are expected before the end of this year. Opening well-aligned to levels seen yesterday morning, Trade balance figures locally today will be a key driver as the Australian dollar currently buys 76.04 US Cents. 

The New Zealand Dollar once again traded in light conditions over the past 24 hours. Opening on the domestic market at 0.7285 against the US Dollar, the Kiwi remained in its present holding pattern between 0.7250 and upside resistance at 0.73. Investors focused on declining oil prices overnight, along with FOMC minutes released early this morning. There was little reaction on the NZD/USD cross post minutes as they support the gradual tightening of monetary policy. With little domestic data on the horizon the New Zealand dollar remains capped below the 0.73 handle and opens this morning at 0.7290.

The Pound rebounded this morning to currently trade at 1.2935 despite another poor PMI showing. Following the marginally lower services PMI data overnight, the Cable dropped to a low of 1.2892 before rebounding strongly when US factory order numbers disappointed the market. The discouraging Services PMI numbers reflect the sectors second consecutive month of slower growth in the UK. As the third disappointing PMI number this week, the impetus for the hawks may have slightly flagged leaving the broader context of an easing of accommodative monetary policy questionable. With a slow Thursday in store on the domestic front, the Cable looks across the Atlantic to US employment numbers for direction.

The US Dollar advanced against all of its major counterparts overnight after the release of the Federal Open Market Committee (FOMC) Minutes. The Greenback was given a boost after most Federal Reserve members think the recent softness in inflation will have little bearing on inflation trend given inflation remains stubbornly below the central bank’s goal. If inflation continues to keep falling the Federal Reserve may need to reconsider its hawkish stance on monetary policy. The EUR/USD pair is currently trading at 1.1351, down from an overnight high of 1.1368. Opening notably stronger versus the Pound Sterling at a rate of 1.2934 the Greenback is also significantly stronger versus both the Australian dollar (0.7605) and the New Zealand dollar (0.7283).