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AUD & NZD edge higher as Greenback remains at a 12 month low

BY MICHAEL JUDGE

During a week of daily gains for the Australian dollar, yesterday’s session proved no different with the domestic unit briefly capturing fresh highs when valued against its US Counterpart. In what’s likely to frustrate policy makers who have repeatedly called out a stronger AUD as a major headwind towards a quicker transition away from a commodity, export-driven growth path, highs overnight of 0.7987 see’s the currency holding levels above valuations not seen in more than two years.   Whilst data flows remain light today, the 80 US cents barrier remarkably only now sits a stone’s throw away as the Australian dollar currently buys 79.57 US Cents. 

The Kiwi advanced again overnight to reach a high of 0.7414, a gain of 62 points from Monday’s open. Opening this morning at 0.74, the market oscillated between 0.7333 and 0.7414 to ultimately post an increase of 81 points, amidst the broader context of continued USD weakness. Across the Tasman, the Kiwi regained some of its losses to open this morning at 0.93. Initially the cross was driven down by Australian labour data but worked its way back up as Iron Ore prices dipped. With a quiet end to the week on the domestic economic calendar in store for the Kiwi, the New Zealand Dollar looks to tread water ahead of the European and American trading sessions.   

The Great British Pound suffered a downward correction against the Greenback during Thursday day of trade and strong U.K Retail Sales numbers were unable to keep the GBP/USD above the 1.30 handle. Figures released by the ONS showed a rise by 2.9 per cent annually and 0.6 per cent on the month in June, the rise was mainly driven by the warmer weather and gift purchases over Eid which was held last month. The Cable moved off highs of 1.3031 down to a low of 1.2932 and now risks perhaps a retest of the low/mid 1.28s. Looking ahead data out later today is U.K Public Sector Net Borrowing which is forecast to drop to 4.3B vs last month 6.0B reading. 

 

Dominating flows in overnight trade was Central Bank activity as both the ECB and BOJ maintained the status-quo with reference to existing interest rate settings. Whilst the JPY remained relatively steady versus the Greenback, opening at 111.816 this morning, the same cannot be said for the Euro which initially whipsawed, later advancing against the worlds reserve unit. Reaching an eventual high of 1.1656, gains have since been solidified for the shared currency after Mario Draghi  signalled that the ECB would review bond purchases in the autumn as policy makers initiate the tricky process of unwinding QE, in essence normalising monetary settings.  Opening at levels not seen in more than a year the Bloomberg Dollar Spot Index fell a further 0.3 percent.