Daily Currency Update

Get access to our expert daily market analyses and discover how your currency has been tracking with our exchange rate tools

Australian Dollar Trades Above 79 US Cents

BY JOEL HOLMES

The Australian dollar rebounded through trade on Wednesday having tested key technical supports earlier this week. Improved copper and iron ore prices combined with broader US dollar weakness following the Federal Reserve’s release of its July meeting minutes helped the AUD bounce of monthly lows at 0.7818 and rally more than 100 points to intraday highs at 0.7925. Heightened stagflation concerns peppered the Fed’s minutes and dampened investors’ expectations for a monetary policy adjustments and a December rate hike forcing markets to unwind the weeks earlier USD gains. Opening this morning buying 0.7927 U.S. cents attentions turn to domestic labour market data for direction through trade today. With unemployment expected to remain steady at 5.6% a move beyond market expectations is needed to prompt any significant price action beyond resistance at 0.7960 and 0.80.

The New Zealand dollar rallied through 0.73 U.S. cents during trade on Wednesday as wide spread U.S dollar weakness fueled renewed demand for commodity linked currencies. Bouncing off key technical supports near 0.7230 the Kiwi surged to intraday highs at 0.7320 as investors corrected U.S monetary policy expectations following the Federal Reserve’s release of if July FOMC meeting minutes. Concerns surrounding inflation and the possibility of revisions in how the key macroeconomic metric is measured forced analysts to downplay the possibility of a December rate hike and pushed the greenback lower across the board. Opening this morning buying 0.7308 U.S cents attentions now turn to domestic PPI data as a precursor for consumer lead inflation and U.S unemployment claims for direction throughout trade on Thursday.

The Great British Pound advanced overnight against the Greenback, breaking through the 1.29 barrier, reaching a 24-hour high of 1.2903. On the local data front yesterday the UK released upbeat employment data, for the three months to June the unemployment rate fell to 4.4% from 4.5%. Looking ahead today will see the release of monthly Retail Sales figures for July with expectations of a 0.2% expansion albeit down from the previous months result of 0.6%. The GBP/USD pair is currently trading at 1.2891. We now expect support to hold on moves approaching 1.2850 while any upward push will likely meet resistance around 1.2920.

The greenback rally seen this week took a turn for the worse overnight, reversing gains seen over the past 48 hours. The selloff started with the release of FOMC minutes in the North American session as members were split over the future path of interest rate rises. The main concerns over low inflation levels, currently below the target rate of 2% look to be a key factor in movements in the U.S Dollar with the next round of CPI figures out September 13th. Markets are currently pricing in very little chance of a hike in next month’s meeting, with a 50% chance by year end. The DXY which measures a basket of currencies was weaker and has lost 0.38% for the day. The EUR hit fresh highs of 1.1775 this morning after FOMC minutes. Earlier the EUR saw lows of 1.1680 after it was noted ECB President Mario Draghi would not be speaking at Jackson Hole on monetary policy outlook. USD/JPY fell to support at the 110 handle overnight, as investors look towards the release of unemployment claims this evening.