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Australian Dollar Steady – BOE Super Thursday Looms

BY JOEL HOLMES

Struggling to recapture levels above the 80 US Cents mark, the Australian dollar enjoyed a relatively quiet session yesterday. Having lost 0.5 percent when valued against its US Counterpart earlier in the week, price activity has been limited over the past 24 hours as investors await the release of Trade Balance figures which are due out at 11:30am AEST. Whilst minutes from the RBA’s August meeting are also  lingering on the horizon, near-term volatility levels could be further jolted on Friday ahead of a key labour market report from the United States. Idle for the time-being the Australian Dollar currently swaps hands at a rate of 0.7965. 

The New Zealand dollar continued its’ bearish momentum after yesterday’s weaker than expected employment data provided further impetus for the Reserve Bank to hold cash rates for an extended period of time. The labour market report was a mixed bag but ultimately showed a fall of 0.2% in employment figures against an expected increase of 0.7%. As a consequence, the Kiwi fell from its previous open at 0.7471 to trade at a near week low of 0.7410. Opening this morning slightly higher at 0.7415 the Kiwi also felt the added pressure of the latest Global Dairy Trade auction results which showed a contraction of 1.6%; marking its fastest rate of contraction since March. The Pair now turns to the ANZ commodity price index for direction locally.

The Great British Pound continued to advance against the Greenback on Wednesday reaching a 24-hour high of 1.3249. The Sterling wasn’t able to push through the 1.3250 barrier after weak construction PMI data which came in at 51.9 in July, an 11-month low, down from 54.8 the previous month. The result reflecting lower volumes of commercial building and a softer expansion of housing activity. Looking ahead tonight all eyes will be on the Bank of England Inflation Report with expectations official interest rates will remain on hold at 0.25 per cent. The GBP/USD pair is currently trading at 1.3224. We now expect support to hold on moves approaching 1.3200 while any upward push will likely meet resistance around 1.3250.

 

The U.S. dollar dipped slightly lower in overnight movements as ADP non-farm employment just missed forecasts of an increase of 185,000 jobs. Despite a reading of 178,000 jobs created in the last month, the USD/JPY started its decline from intraday highs of 110.97 to see lows of 110.30. The U.S. Dollar index hit fresh 15 month lows overnight of 92.60, with the majority of movement off a stronger Euro and doubts over further increases in interest rates this year by the Federal Reserve. The DXY eventually regained most of the losses to be 0.16% down for the day at 92.88. EUR/USD rallied a cent higher to continue its bullish run off a weaker greenback and eventually topping out overnight at 1.1902. With political tensions continuing to rise in the United States, the greenback could continue to remain under pressure in the lead up to Non-Farm Employment figures on Friday evening.