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US Dollar weakens across the board post GDP

BY JOEL HOLMES

Proving to be another monumental week for the Australian dollar, which saw investors successfully navigate additional commentary from the RBA, a domestic inflation print as well as the delivery of key growth metrics from the United States. Spending the majority of the past five days within reaching distance of the 80 US Cents mark, over the coming days investors will be looking to recapture highs of 0.8065 versus its US Counterpart amid hopes that the RBA’s August 1st interest rate decision will spur further demand for the AUD as participants look for any indication of a greater willingness to move away from its current easing cycle.  Ahead of key manufacturing prints from China this morning the Australian dollar currently buys 79.82 US Cents. 

The New Zealand dollar again pierced the 0.75 mark to open this morning at 0.7509. The Kiwi was strengthened in overnight trading by a weaker US dollar as the broader narrative of a softer greenback was vindicated to an extent by lacklustre US GDP numbers. Oscillating between 0.7494 and 0.7512, the New Zealand Dollar shows no signs of fatigue with the US being in the driving seat to determine direction this week. Locally however Traders will also look to the ANZ business survey for direction with an eye on Wednesday’s Q2 Labour market data. 

The Great British Pound advanced against the Greenback on Friday on the back of continued US dollar weakness reaching a high of 1.3146. There was no macroeconomic data releases in the UK on Friday. Looking ahead this week all kicks off on Tuesday with monthly Manufacturing PMI. On Wednesday will see the release of Construction PMI. All attentions will then turn to Thursdays Bank of England Inflation Report where the official cash rate is expected to remain at 0.25 per cent. The GBP/USD pair is currently trading at 1.3138. We now expect support to hold on moves approaching 1.3100 while any upward push will likely meet resistance around 1.3170.
 

 

Friday movements were dominated by the release of United States GDP figures for the 2nd quarter of 2017. Despite a solid number at an annualised pace of 2.6% vs expectations of 2.7%, The US Dollar was sold off against G10 currencies. EUR/USD rebounded to see its highest weekly close of 1.1755 since January 2015, supported by broad US Dollar weakness and a stronger German CPI print. USD/JPY hit fresh 6 week lows, tumbling from intraday highs of 111.30 to close at 110.60. The DXY fell 0.6% to close at 93.34 as the CME Fedwatch Tool has reduced slightly to a 47% chance of one further interest rate increase by the Federal Reserve by year end.