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Markets steady ahead of Thursday's US Inflation Data


The Australian dollar held a relatively tight 50-point range through much of Tuesday having found support on moves toward 0.80 U. S cents. With little macroeconomic data to steer direction the Australian Dollar bounced between intraday lows at 0.8001 and session highs at 0.8050 as investors simply squared positions and risk appetite crept back into the market. Despite easing tensions with North Korea and the softening of Hurricane Irma investors were wary of extending USD gains. The bearish channel remains intact and CPI inflation data poses a significant risk to short term positioning. Attentions remain squarely fixed on Thursday Domestic labour market print and U.S inflation read as key markers and possible catalysts driving an immediate directional shift. 

The New Zealand dollar moved higher in the domestic session yesterday, benefitting from the latest opinion polls in the lead up to the general election on September 23rd. Opening at 0.7250 against its American counterpart, the Kiwi drifted off to an intraday low of 0.7220 before surging higher after the Newshub poll suggested an increase in lead for the National Party to 47.3%. The NZD/USD cross hit eventual highs of 0.7320 rallying a full cent. The New Zealand dollar opens at 0.7285 ahead of the latest Food Price Index figures due for release this morning.

The Great British Pound found upside when valued against its US counterpart over the past 24 hours, trading as high as 1.3298 versus the US Dollar a level not witnessed for one year. The main catalyst for the move was a jump in the inflation rate more than markets had forecasted, according to the Office for National Statistics the rate jumped from 2.6% to 2.9% last month which puts pressure on the Bank of England to start tightening their monetary policy rate. The GBP/USD pair may continue to find support with today’s release of UK Average Earnings Index and the Unemployment rate, investors are hoping to see a rise in average earnings in July of 2.3%.

The greenback closed marginally higher again overnight when valued against most of its major rivals. The greenback rallied following the lead of U.S. stocks as the mood stayed positive on global markets overnight. The S&P500 closed at a new record high on Tuesday. The index closed the session at 2,496.48, a gain of 0.3 percent, notching intraday and closing records. In other US news overnight damage estimates for Hurricane Irma, a storm that was once a Category 5 hurricane, were broadly lowered. Today on the US macroeconomic calendar will see the release of monthly US Producer Price Index (PPI) for August. In the Eurozone we saw a very quiet night with no data releases. Today will be similar with the only release of monthly German Inflation for August. The EUR/USD currency pair reached an overnight low of 1.1926, currently trading at 1.1966. We now expect support to hold on moves approaching 1.1920.