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Greenback under pressure as trump threatens NAFTA and Government Shutdowns

By Matt Richardson

The Australian dollar remains little changed against the greenback on Wednesday falling to a weekly low of 0.7882. The Australian macroeconomic calendar once again has no scheduled data releases set for today. The Aussie remains on a neutral footing around the 0.7900 level while the lack of local data leaves traders focussed on the Jackson Hole meeting in the US tonight. The AUD/USD pair is currently trading at 0.7906, slightly down from this time yesterday 0.7912. We now expect support to hold on moves approaching 0.7880 while any upward push will likely meet resistance around 0.7940.

The New Zealand dollar is weaker this morning when valued against the Greenback. Overnight saw the Kiwi fall to a low of 0.7197 hanging near a 6-week low. The kiwi dollar was the worst performer yesterday in the Asian region, off as much as 0.7 per cent after the New Zealand Treasury reduced its economic growth forecast for the year to June to 2.6 percent from 3.2 percent previously, and cut its future growth estimate for the year to June 2018 to 3.5 per cent from 3.7 per cent. The NZD/USD pair is currently trading at 0.7226. We now expect support to hold on moves approaching 0.7125 while any upward push will likely meet resistance around 0.7280.

The Great British Pound fell below 1.28 overnight for the first time since June. Ongoing discussions over the impact of Brexit look set to impact Cable, hitting an intraday low of 1.2780. With little macroeconomic data out domestically, investors focused their attentions on the uncertainty of the future relationship between the UK and EU, potentially putting further pressure on the Sterling over the coming months. Sterling regained some of its losses overnight as the U.S Dollar dropped on Trumps threat to shut down the government to pressure congress on funding for the border wall. The Great British Pound opens this morning at the 1.28 handle ahead of the release of second estimate GDP figures this evening.

The U.S Dollar retreated through trade on Wednesday giving up gains against the Euro, Yen and basket of major currency counterparts. The dollar met selling pressure as markets appetite for risk was tested following comments from President Trump suggesting he would end the North American Free Trade Agreement. Talks between the US, Mexico and Canada seemingly broke down again on Tuesday as divisions between the three leader’s expectations widened. Trump even went so as far to suggest he would shut down government and deny increases in the debt ceiling if he was unable to obtain funding to build his Mexico border wall. Falling back through 109 JPY and giving back 1.18 to the 19 nation Euro the dollar opens this morning broadly lower. The ongoing stream of uncertainty emanating from the White House continues to weigh on the worlds base currency as attentions turn to Central Bank monetary policy expectations on day one of the Jackson Hole symposium. A hawkish or upbeat Janet Yellen may be the fodder needed to spark a revival in dollar demand and break the recent bearish downtrend.