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Australian Dollar Steady – Support at 79 U.S cents

BY MICHAEL JUDGE

Markets have in most part lacked conviction during the early parts of this week with the only spike in volatility coming off the back comments made by US President Donald Trump who vowed to respond aggressively amid rising tensions between the two nations. Whilst flows mainly favoured the world’s safest havens,  the Australian dollar has remained in a relatively timid mood dropping belong below the 79 US Cents mark in overnight trade. Opening virtually unchanged this morning at a rate of 0.7913, CPI and PPI numbers from China today are likely to garnish the greatest degree of attention. 

Another quiet day yesterday in New Zealand with the New Zealand Dollar trading within a tight 26 pip range. The Kiwi reached an overnight high of 0.7369 against the Greenback. All eyes this week will be on Thursdays RBNZ meeting with market expectations the central bank to proffer some relatively dovish direction given low inflation and concerns about the overall Kiwi Dollars strength. The interest rate is expected to remain at 1.75%. There are no data releases scheduled for today. The NZD/USD pair is currently trading at 0.7329. We now expect support to hold on moves approaching 0.7280 while any upward push will likely meet resistance around 0.7430.

The Great British Pound plunged in overnight trading to open this morning at 1.2991. The Sterling traded within a wide range, oscillating between 1.2952 and 1.3053. With little on the economic calendar to support the Sterling, the weakened Cable became susceptible to general USD buying which pushed the Pound below the critical 1.3 support level. Now within downside territory, the Great British Pound turns to month on month Manufacturing Production numbers domestically and to PPI and Unemployment figures in the US for further direction.

Having bounced from some critical support levels late last week, the Greenbacks near-term direction has been further clouded overnight following comments made by US President Donald Trump. Spurring volatility levels which saw US Stock Markets fall, Trump delivered a warning to North Korea, stating that any threats made to the US would be met with “fire and fury”.  In the absence of any economic drivers it has instead been underlying risk settings which has set the tone this week,  a move which has favoured a fall in US Treasuries and a rally for the Japanese Yen. With the next two sessions shaping up to be relatively quiet, key CPI figures from the United States on Friday promises to be a key ingredient towards near-term interest rate settings.