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US Dollar weaker – Yellen fails to deliver policy update

By Joel Holmes

The Australian dollar advanced against the greenback on US Fridays session. The Aussie reached a session high of 0.7948 trimming its weakly losses.  The Australian macroeconomic calendar was empty last week, and will remain light in the upcoming few days ahead with monthly Building Approvals for set for release on Wednesday. The AUD/USD pair is currently trading at 0.7946. We now expect support to hold on moves approaching 0.7910 while any upward push will likely meet resistance around 0.7960.

The New Zealand dollar advanced against the greenback on US Fridays session after the Jackson Hole speeches of Janet Yellen and Mario Draghi which drove the USD weaker. The Kiwi trading higher this morning reached a top of 0.7253. A fairly quiet start to the week with no scheduled macroeconomic data releases until Wednesday with the release of monthly Building Consents for July. On Thursday we will see the release of ANZ Business Confidence. The Kiwi finished the week flat against the Aussie 1.0945 (0.9136) and weaker against the Euro 0.6071 (1.6471).

The Great British Pound succumbed to further selling pressure last week as the weight of Brexit negotiations continues to push the unit toward key levels of technical support. Having broken through 1.28 USD Sterling found support moving back through 1.29 following commentary from Fed Chair Janet Yellen. Yellen failed to offer any insight into Fed Monetary Policy expectations when addressing attendees at the Jackson Hole Symposium of central bankers disappointing investors and initiating a broader USD depreciation. Sterling touched intraday highs at 1.2935 while struggling to make any headway against the Euro. With a call for parity now on the table the Pound feel through 1.08 and neared record lows. In the wake of stagnant macroeconomic cues and increasing concerns for a hard Brexit the embattled GBP could face a fourth weekly depreciation against the 19 nation combined unit. As investors enjoy and extended bank holiday weekend attentions turn to further Brexit developments ahead of another relatively quiet macroeconomic docket.

Markets were driven by a lack of monetary policy remarks by Fed Reserve Chair Janet Yellen at the Jackson Hole Symposium over the weekend. The US Dollar index dropped immediately to three week lows of 92.80 as markets were disappointed from a lack of fresh news and closed 0.72% lower at 92.52. The Euro was one of the best performing currencies on Friday hitting twenty month highs of 1.1950 as ECB President Mario Draghi refrained from further rhetoric to talk down the higher common currency. Following the flow of US weakness, USD/JPY fell from intraday highs of 1.0985 to close at 1.0910. It will be a quiet 24 hours with little on the economic docket as we look towards ADP Non-Farm and Prelim GDP figures Wednesday evening out of the United States.