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Quiet day ahead in Australia

BY BRETT OTTAWA

The Australian Dollar is weaker when valued against its US counterpart and has moved lower for a fourth straight day in a row trading as low as 0.7567. Despite local Trade data intraday showing a surplus rebound sharply in May of 2.47bn the Aussie was dragged lower with investors thoughts still on the RBA’s neutral stance. The rebound was reflected in coal exports after Cyclone Debbie has disrupted output in April. Total exports rose 8.5% in May after a 7.5% drop in April. Meanwhile, imports rose 0.7% in May after a 0.4% decline previously. The local docket remains lights today and attentions will turn to tonight’s US non-farm payrolls and unemployment with short-term volatility expected. 

The New Zealand Dollar took a turn lower overnight as selling pressure resumed in overnight trading. United States Treasury yields rose to near eight week highs putting a dampener on higher yielding currencies such as the Kiwi. Markets saw a dip in the NZD/USD cross from 0.7285 to an overnight low of 0.7245. Broader US Dollar weakness was seen during the North American session as the New Zealand dollar clawed its way back to nearly pair losses on the domestic open. With little domestic data on the docket, further leads will be taken from U.S Non-Farm Employment data this evening. The New Zealand Dollar opens this morning at 0.7275 against the U.S. Dollar.

The Sterling surged in overnight trading amidst a global bond market sell off, forcing equities lower. The Pound managed to gain against the USD, following positive comments from Ian McCafferty, a policy maker within the Bank of England. Forcing its’ way to 1.2970, gaining 0.28% on the day, the Sterling took confidence from McCafferty’s suggestion that should the economy match their forecasts, the BOE will look to tighten its’ monetary policy. The most notable forecast being Inflation which the MPC can no longer ignore. With the broader macro-economic narrative still very much at the forefront of traders’ minds, investors are turning to clues on the strength of the economy to value the Sterling. With Manufacturing Production numbers and the G20 kicking off today, the Cable could see an action packed close to the week.

The Euro received a major boost overnight reaching a high of 1.1424 breaking through 1.1400 level, getting an expected boost from the ECB's account of the monetary policy meeting. The hawkish commentary was certainly felt across financial markets with the Euro the best performing currency in the last 24 hours. The EUR/USD pair is currently trading at 1.1422. We now expect support to hold on moves approaching 1.1380 while any upward push will likely meet resistance around 1.1460. All eyes tonight will be on the upcoming US non-farm payrolls for June with expectations payrolls to increase by 178,000 with the unemployment rate to remain steady at 4.3%. The Greenback also opened weaker versus the Pound Sterling at a rate of 1.2968.