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Australian Dollar pushes through 80c overnight against the Greenback

By Shameem Musa

The Australian dollar enjoyed strong gains through trade on Tuesday forcing its way through the psychological 0.80 handle and touching intraday highs at 0.8028. Investors broadly ignored the RBA’s rate announcement and accompanying statement as monetary policy was left unchanged and little was offered in the form of forward guidance. Instead the AUD took its cues from offshore stimuli rallying against the USD as the world’s base currency suffered its largest single day depreciation in more than 3 months. Investors driven by escalating tensions with North Korea fled to safe haven assets and high yielding emerging markets as risk appetite waned. Having broken through the 0.80 handle the door opens for broader upside gains and attentions turn to quarterly GDP data ahead of tomorrow’s retail sales and trade balance prints as possible catalysts for a move higher and a test of new resistance levels at 0.8040 and 0.8080.

The New Zealand dollar saw strong gains through trade on Tuesday and was the best performer among G10 currencies. Shrugging of tepid demand for risk the Kiwi surged back through resistance at 0.7190 and touched intraday highs at 0.7263. A steady uptick in Global Dairy Trade prices helped fuel a broader rally driven by USD weakness. The worlds base currency suffered its largest daily depreciation in over 3 months when valued against safe haven and high yield emerging assets as escalating concerns surrounding North Korea and commentary from key Fed officials cast doubts over a possible December rate hike. Holding firmly onto gains the Kiwi opens this morning buying 0.7241 U.S cents as attentions remain with global geopolitical tensions as the key driver of direction.

 The Great British Pound is stronger this morning when valued against the Greenback. On the back of soft US data coupled with returning risk aversion the GBP/USD pair surged to an overnight high of 1.3042, its highest since August 11th. On the data front yesterday UK Services PMI for the month of August came in at 53.2, its lowest level in 11 months, and down from previous 53.8. August survey data indicated that the UK construction sector also continued to experience a slowdown. The result 51.1 in August was down from 51.9 in July. There are no data releases scheduled for today. The GBP/USD pair is currently trading at 1.3042. We now expect support to hold on moves approaching 1.2990 while any upward push will likely meet resistance around 1.3080.

The EUR/USD was mostly flat in the Asian session hovering around the 1.19 level. Macroeconomic data released out of the Eurozone came in shy of expectations for Retail sales which fell 0.2% vs an expectation of 0.3%. Eurozone Services PMI slowed to 54.7, shy of the estimate of 54.9 points, the Euro moved to a low of 1.1868 following the data release however recouped all losses once the US markets opened and we saw the release of US factory orders declining in May which sparked concerns over the strength of the U.S manufacturing sector. The Euro touched an eventual high of 1.1941 and is currently changing hands at 1.1920 at the time of writing.