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Safe Haven Currencies in Demand – AUD below 79 U.S. Cents


Investors have opted to dump the Australian dollar over the past 24 hours, seemingly losing their appetite to hold assets deemed riskier in nature. With US President Donald Trump stating overnight that his earlier warnings to North Korea may not have been tough enough, global markets have been engulfed by a broader shift which has benefitted the world’s safest and deepest pockets. Whilst the AUD/USD pair still sits above key resistance, a move below 0.7830 would expose the currency to additional selling pressures. Mindful that risk sentiment will play an important part during the back end of this week, a US CPI print this evening will also be closely observed. Opening on the back foot the Australian dollar currently buys 0.7873. 

The New Zealand Dollar is weaker this morning when valued against the Greenback reaching an overnight low of 0.7251, down from the previous day’s high of a 0.7368. On Thursday the Kiwi took another hit but from the central banks RBNZ Governor Graeme Wheeler, which unsurprisingly held the official cash rate at 1.75%, made it very clear during his press conference he is not happy with the current strength of the Kiwi dollar. Today there is little to no macroeconomic data scheduled. Attentions turn to the US with all eyes on July CPI figures. The NZD/USD pair is currently trading at 0.7265. We now expect support to hold on moves approaching 0.7250 while any upward push will likely meet resistance around 0.7360.

The Great British Pound moved again through 1.30 overnight and touched three week lows at 1.2955 as investors looked to amend positions ahead of key industrial output and trade data. Softer prints across the board and the spectre that is the Brexit process weighed heavily on the pound and a sluice of softer macroeconomic data raises ever increasing concerns as to the health of the wider economy. With the Pound seemingly on a downward trajectory attentions now turn to key inflation, wage growth and retail sales data next week for further direction and perhaps catalysts to arrest the current slide. 

No change to geopolitical risks overnight which sit at heightened levels this week. Both Equities and the U.S. Dollar saw downside movements after Trumps “Fire and Fury” threats. The S&P 500 down 1.45%, also following suit was the the Dow 0.93%, as the USD/JPY cross was pummelled to eight week lows in a flight to the safe haven currency. USD/JPY is expected to test 1.09 in low liquidity as a bank holiday in Japan is observed. EUR/USD once again pulled lower to test support at 1.17 and erased all gains to pull higher after a disappointing PPI reading in the United States. Investors turn their attention to the anticipated inflation reading this evening in the United States which could have an effect on current market pricing for any further interest rate hikes by the Federal Reserve this year.