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U.S Dollar dips on Fed official Brainard’s comments

BY SHAMEEM MUSA

The Australian dollar has surprisingly pushed forward in overnight trade after market participants were left shocked by fresh reports of possible Russian involvement in last year’s US Election Campaign. Advancing to a high of 0.7642 when valued against tis US Counterpart, its highest mark of the week, markets appeared destined for an otherwise listless session ahead of the jolt which triggered some noted selling across US dollar dominated assets. Whilst the waiting game continues ahead of Janet Yellens testimony overnight on Thursday the AUD opens 0.3 percent higher this morning as it currently buys 76.37 US Cents.

The New Zealand Dollar rose against the greenback after Donald Trump Jr.'s released emails detailing 'Russia and its government's support for Mr. Trump' his father's campaign to become US president. The NZD/USD pair hit an overnight high of 0.7257. The NZD/USD pair is currently trading at 0.7221. We now expect support to hold on moves approaching 0.7208 while any upward push will likely meet resistance around 0.7265. However the Kiwi is weaker against the Euro (0.6301) and the pound sterling (0.5620). After strong NAB Business Confidence in Australia yesterday the Kiwi also fell against the Aussie trading at 1.0557 (0.9454). 

The Great British Pound was sold off again after failing to push through the 1.29 handle overnight. Opening the UK domestic session at 1.2870, Cable moved to an intraday high of 1.2920. BRC Retail Sales Monitor for the month of June rose by 1.2% and was released during Asian business hours. Sterling was sold off after MPC member Andrew Haldane and Ben Broadbent failed to deliver any meaningful update for future interest rate rises. Eventual lows were seen at 1.2832 as the FTSE closed 0.5% lower for the day. Cable steadied during the North American session, trading sideways and opens this morning at 1.2850. Great British Pound also opens lower against the Australian dollar – 1.6825, and New Zealand dollar – 1.7790.

The Euro has rallied sharply higher against the U.S Dollar moving from low of 1.1382 and a high of 1.1480 after comments from a Fed member Lael Brainard about “moving cautiously on further increases” due to low inflation. The EUR/USD pair is currently trading at a 14-month high at 1.1469. Meanwhile, on the other side of the world, the bank of Japan said M2 money stock in Japan was up 3.9% on year in June which was in line with market expectations and Japanese Preliminary Machine Tool Orders increased to 31.1% up from 24.4% a month earlier. The data releases did little to move the USD/JPY which did touch an overnight high of 1.1407 ahead of the Fed Janet Yellen’s testimony to congress on Wednesday 12th and Thursday July 13th. The testimony from Yellen always needs to be watched very closely, given potential hints on monetary policy and markets will still be monitoring comments on interest rates and policy normalisation very closely.