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Australian dollar remains above US 79¢ with focus today on CPI data

BY BRETT OTTAWA

The Australian Dollar managed to hold its’ gain above the 0.79 mark opening this morning at 0.7936. Backed by continued commodity strength, particular in the Copper industry, the AUD oscillated between a low of 0.7902 and a high of 0.7970 over the last 24 hours. With the broader narrative of an immobile trump administration proving to be a concern, the USD continues to show signs of weakness, buttressing the Australian Dollars’ gains last week. Traders now turn to a packed economic calendar with Governor Lowe and CPI numbers being released today ahead of the Federal Reserves’ Cash Rate announcement.

Yesterday lacked any data of economic significance and kept the NZD/USD within a range of 0.7377 and 0.7451. The RBNZ Assist Governor McDermott spoke earlier this morning on economic trends and its inflation target. He mentioned their inflation target between 1 and 3 percent on average and that a lower exchange rate would help. In regards to the neutral cash rate, a level of 3.5 percent implies 1.75 percent is stimulatory. Today sees the release of local Trade Balance figures which are forecasted to fall 100 million in June from 103 million in May. As long as the NZD/USD pair holds above 0.7375, we could see another push higher towards 0.7530 with strong resistance can expected at the 2016 high of 0.7485. 

The Great British Pound saw minimal movements in the lead up to the UK domestic session, traded sideways above the 1.3000 handle. Despite UK CBI Industrial Order Expectations missing the mark , UK Manufacturers reported strong output growth in the three months to July with the fastest rate of employee growth in three years. Sterling rose after the result to an intraday high of 1.3082, along with the help of broad US Dollar weakness. Gains were clawed back during the North American session as markets turn its attention to this evenings Federal Funds Rate decision and FOMC statement in the United States. GBP/USD opens steady this morning at 1.3030.

The Greenback fall overnight against a half-dozen of its major rivals on the back of the US political environment. The US dollar is under prolonged pressure due to the continuing controversy surrounding US President elect Donald Trump. US equities have performing strong of late, rising nearly 10% year to date, and notching another all-time high on Tuesday. However the same cannot be said for the Greenback which has fallen nearly 8% year to date against it major counterparts. All attentions turn today to the FOMC statement. The US Federal Reserve is expected to keep its monetary policy unchanged at 1.25 per cent. Opening marginally lower this morning the US dollar is softer versus the Pound Sterling (1.3026) and the Euro (1.1647).