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Greenback slumps as Geo-political tensions re-ignited

BY MATT RICHARDSON

The Australian dollar advanced against the greenback on Monday reaching a 24-hour high of 0.7950. Iron ore spot markets rallied higher to $79.93 a tonne for a third consecutive session. The Australian macroeconomic calendar remains empty this week. Today all eyes will be on the Aussie dollar if it can break through a monthly high 0.7962. The AUD/USD pair is currently trading at 0.7938. We now expect support to hold on moves approaching 0.7910 while any upward push will likely meet resistance around 0.7965.

The New Zealand dollar remains little changed against the greenback on Monday trading within a 33 point range over the last 24-hours. The kiwi reached an overnight high of 0.7337 as investors continue to fret about the Trump administration’s future legislative prospects. The quiet trading conditions are expected to continue right through to the end of the week with the only scheduled data release being Wednesday’s monthly Trade Balance for July. The NZD/USD pair is currently trading at 0.7325.

The Great British Pound traded higher overnight, breaching the 1.29 handle and up 0.3% for the day. Majority of movement was seen during the European session as Sterling rallied from intraday lows of 1.2850. The release of Rightmove House Prices for the month saw a decrease of 0.9% for the month of July. Despite the latest round of Brexit position papers published on Monday, requesting the European Union not to separate goods from services in Brexit negotiations, there was little movement on the GBP/USD cross after the release to markets. Broader moves around Greenback weakness saw the Sterling hit eventual highs of 1.2912 and opens at 1.2897.

The U.S Dollar moved lower through trade on Monday suffering its fourth consecutive daily depreciation as geo-political tensions escalate and investors square positions leading into this week’s Jackson Hole symposium of central banks. Analysts and investors looked to safe haven assets after the U.S, South Korea and their allies engaged in simulated War Games in response to North Korea’s developing nuclear capabilities, sparking rebuke from Pyongyang and reigniting tensions between the rogue state and the US. The Dollar fell through 108.70 JPY touching intraday lows at 108.65 while the Euro moved back through 1.18 to touch session highs at 1.1831. Attentions now turn to this week’s Jackson Hole convention of Central Bank heads. The annual meeting may provide an insight into monetary policy expectations moving through the 3rd and 4th quarters of 2017. While we anticipate key central bank figures in Janet Yellen and Mario Draghi will maintain the status quo and refrain from delivering any updated policy advice the symposium is an opportunity for investors to better assess possible shifts in central banks forward guidance with an eye on a hawkish undertone as a catalyst to spark direction.