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Aussie rallies to four-month highs against the US Dollar

BY SHAMEEM MUSA

The Australian dollar marched higher yesterday afternoon, continuing its impressive run when valued against its US Counterpart. Breaking initially back through the 77 US Cents bracket, highs of 0.7739 were briefly witnessed as the US Dollar Spot Index slumped to its lowest level since September 2016. Supported early by some strong Trade Balance numbers from China which showed firmer global demand is assisting broader economic momentum, eyes and ears over the past 24 hours have remained fixed to Janet Yellen who continued her testimony before the House Financial Services Committee. Looking towards a weekly close above 0.7720 mark the Australian dollar currently swaps hands at a rate of 0.7729.

The New Zealand Dollar advanced against the Greenback overnight powering through 73 US cents. The kiwi reached an overnight high of 0.7326 amid speculation the Reserve Bank may begin to raise interest rates in the near term. Any interest rate hike will depend on Inflation which is currently tracking below the RBNZ's projections, so all eyes will be on next week’s Consumer Price Index data for further direction. There are no scheduled data releases today in New Zealand. The NZD/USD pair is currently trading at 0.7319. We now expect support to hold on moves approaching 0.7260 while any upward push will likely meet resistance around 0.7350. 

The Great British Pound climbed higher overnight as BoE policymaker Ian McCafferty has suggested quantitative easing could come earlier than expected. Opening the day just below the 1.29 handle, movements were quickly seen higher at the start of the domestic session and posting a 0.5% gain for the day. Sterling pulled back slightly after the BOE Credit Condition Survey forecasted a drop in credit to Uk households, before resuming its upper trend to an intraday high of 1.2950 on McCafferty’s comments. With little domestic data on the horizon, Cable will take its leads from United States inflation and retail sales this evening and opens this morning at 1.2940.

In the early European session the EUR/USD pair gained ground and touched a high of 1.1456 as German Final CPI data posted a gain of 0.2%, which was in line with expectations. As the US markets opened the Euro suffered a setback against the worlds reserve currency retracing the gains made earlier on in the week, the pair fell to touch an eventual low of 1.1370. The Fed continued day two of the semi-annual testimony to congress, Yellen didn’t pull out any surprises and reiterated the Fed planned to raise rates gradually and would begin trimming its balance sheet before the end of the year. Turning to economic data, out of the US overnight unemployment claims fell last week for the first time in a month pointing towards strength in the labour market and Producer Prices rose unexpectedly. Attentions now turn to key events out of the US tonight with the release of retail sales, CPI and industrial production. Expectations are for a solid rebound in June retail sales and industrial production and a gradual re-acceleration in June core CPI inflation.