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Risk Off Sentiment - Australian Dollar below 79 US Cents

BY JOEL HOLMES

The Australian dollar enjoyed mixed fortunes through trade on Thursday advancing early on stronger than anticipated labour market date before renewed U.S dollar strength forced the currency back below 0.79 U.S cents. Bolstered early the AUD touched intraday highs at 0.7964 after employment change data showed near on 30,000 jobs were added to the economy throughout July while the unemployment rate fell to 5.6%. The upbeat print marks the fifth consecutive month of labour market improvements and has some investors calling for the RBA to revise its policy outlook, however the spectre of stagnant wage growth capped gains and a renewed push toward 0.80 stalled. Moving lower through offshore trade the Aussie broke below 0.79 on renewed demand for haven assets as continued White House instability and Spanish Terror attacks sapped investors’ appetite for risk. Currently buying 0.7887 U.S. cents attentions now turn to offshore stimuli for direction into the weekend as we anticipate support at 0.7830 with resistance again on moves approaching 0.7960/0.80. 

The New Zealand dollar moved marginally lower through trade on Thursday on renewed demand for safe haven currencies. News of a terror attack in Spain and ongoing uncertainty within the Trump administration sapped investors’ appetite for risk and forced the NZD below 0.73 U.S cents. Having touched intraday lows at 0.7281 the Kiwi opens this morning buying 0.7285 as attentions remain offshore with direction into the weekend driven primarily by risk flows.

The Great British Pound is weaker this morning when valued against the Greenback. The Sterling fell below 1.29 mark on Thursday reaching a 24-hour low of 1.2852. On the data front yesterday UK July retail sales came in better-than-expected as the volume of sales grew by 0.3% in the month, and by 1.3% when compared to a year earlier. There are no macroeconomic data releases scheduled for today. The GBP/USD pair is currently trading at 1.2869. We now expect support to hold on moves approaching 1.2830 while any upward push will likely meet resistance around 1.2895. 

The Greenback saw gains overnight, its biggest upside movements after the release of July minutes by the ECB and a general risk off tone. The DXY saw positive territory and is up 0.23% for the day, and looks to continue its run up to 94.00.  Positive upside recently by the Euro was halted as the ECB minutes showed concerns of recent strength in the currency, causing the EUR/USD cross to drop 1.2% from tops of 1.1795 to an intraday low of 1.1665. The Greenback was weaker against the Japanese Yen as Dallas Fed President Robert Kaplan warned the market to be patient on further interest rate rises, as they wait to see further progress on waning inflation figures.  Further bids into the Yen were seen after a terrorist attack in the centre of Barcelona, with risk off tones pushing the USD/JPY position below 110 for the day and continues to slide on open to 1.0940 on open this morning.