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All eyes on Jackson Hole and key Central Bank Commentary

By Matt Richardson

 Whilst remaining steady, the Australian dollar struggled to advance during Thursday’s session, idling between a slim trading band when valued against its US Counterpart. Limiting its momentum, investors have become increasingly cautious in the lead up to this evening’s Central Bank gathering with political wrangling over the US debt ceiling also keeping a number of participants sidelined.  During a window which has generally supported the Greenback, tonight’s Jackson Hole Symposium has the potential to dramatically change the near-term make-up of markets. Opening marginally lower the Australian dollar currently buys 78.97 US Cents.

The New Zealand dollar remains little changed against the greenback on Thursday. Overnight the kiwi reached a high of 0.7235. There has been little news reported this week, a light macroeconomic calendar. Yesterday New Zealand’s trade balance data surprised to the upside in July as it rose to $85m, while economists expected a deficit of $200m. The market now turns its attention to the upcoming Jackson Hole meeting this evening. The NZD/USD pair is currently trading at 0.7204. We now expect support to hold on moves approaching 0.7180 while any upward push will likely meet resistance around 0.7330.

The Great British Pound rallied off eight week lows overnight as Second Estimate GDP figures for the quarter was on target at 0.3% in line with expectations. The market took this as good news, boosting through the 1.28 handle against the Greenback after initial lows of 1.2775. Year on year growth also met expectations at 1.7%, yet was the weakest rate for three years. Cable topped out at 1.2837 during the European session, eventually pulling back to support at 1.28. With no significant data on the domestic front, investors focus their attention to this weekend Jackson Hole Symposium as the GBP/USD cross opens this morning at 1.2800.

The U.S Dollar steadied through trade on Thursday recouping a small portion of the losses suffered through trade on Wednesday following Presidents Trumps threats to NAFTA and suggestion of a wider government shutdown. As focus shifted back to macroeconomic indicators ahead of the Jackson Hole Symposium the dollar moved back through 1.09 JPY to touch intraday day highs at 1.0960 while the Euro moved through 1.18 to 1.1784. Driven by a reasonably stable macroeconomic set the dollar found momentum as investors square positions ahead of key commentary from Fed Chair Janet Yellen and ECB President Mario Draghi. Both central bank figureheads are due to address the Jackson Hole Symposium today with analyst closely attuned to the rhetoric and fundamental undertone of their respective commentaries. Should Yellen drive home the Fed’s desire to push through a December rate hike we may see some dollar strength and a shift in focus back to the Federal Reserve monetary policy.