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US Dollar recovered most of its post-Federal Reserve losses

BY BRETT OTTAWA

One of the strongest global performers yesterday the Australian dollar broke down key resistance levels when valued against its US Counterpart on Thursday, comfortably breaching the 80 US Cents mark. Despite a week which has been jam packed with key risk events, the AUD has seemingly been on auto-pilot with favourable risk proximities as well as a muted Greenback both providing a solid platform for its push forward. Suggesting there wasn’t a great deal of conviction underlying the climb higher, highs of 0.8065 proved to be relatively short-lived and despite a trading range in excess of 1 US Cents the Australian dollar once again opens in a familiar position of strength, albeit slightly lower than the same time yesterday at a rate of 0.7967.

The New Zealand Dollar retreated in overnight trading after reaching a 26-month high against the US Dollar. Opening this morning at 0.7490, the Kiwi advanced yesterday to as high as 0.7557, spurred on by what traders considered to be a dovish statement from the United States Federal Reserve. As the American session opened overnight however, the Greenback hit back against its detractors clawing its way back on the strength of US durable goods orders and further consideration of the Fed’s statement. Across the Tasman, the Kiwi traded within a tight range and opens this morning at 0.94, reflecting the midpoint of the weekly range.  Looking ahead to a light domestic economic calendar, direction is expected to be derived from off shore data. In particular, traders will look to US GDP numbers later in the evening. 

The Great British Pound recent bullish run and fresh highs for 2017 were halted by a reversal in US Dollar fortunes in overnight trading. Cable saw a 2017 high of 1.3155 during the UK domestic session, supported by UK CBI Realised Sales, where retail sales picked up in the year to July, driven by grocery and clothing sales. The new appointment of BOE Deputy Governor David Ramsden put a dampener on the Sterling rally, as the Ramsden appointment is seen to be dovish. This could put a delay on any potential hikes, with the first rise fully priced in by February 2018. That along with a reversal in the recent US Dollar weakness after a strong U.S durable goods orders print saw the GBP/USD cross crumble to an intraday low of 1.3055. With little news on the domestic front, Sterling looks to its next official bank rate decision, whereby the Bank of England meets next Thursday. Sterling opens this morning at 1.3070.

The greenback advanced higher overnight against its major counterparts, having reverted most of its post-Federal Reserve losses. The EUR /USD pair reached a high of 1.1776 earlier in the day. Now trading at 1.1676. Against the Pound Sterling the Greenback reached a 24-hour high of 1.3158 before settling around 1.3062. On the US data front last night Durable Goods Orders surged by 6.5% in June, beating expectations of a 3.5% advance. We also saw the release of Goods Trade Balance for the month of June, the trade deficit was of $63.9B, better than previous months $65B. Weekly US jobless claims climbed by 10,000 for the week which came in at 244K, up from previous' week 234K. Looking ahead today the main data release will be US Q2 preliminary GDP with expectations the US economy grew by 1.3% in the three months to June.