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Greenback gains against most major currencies

By Shameem Musa

The Australian Dollar opened weaker this morning when valued against the Greenback on the back of escalating tensions between North Korea and the United States. Yesterday we saw the Aussie dollar confined to a limited range of roughly 30 pips. The Australian macroeconomic calendar has a quiet week ahead, there are no scheduled data releases for today, the Aussie dollar will continue to be driven by investor sentiment.  The AUD/USD pair reached an overnight low of 0.7926, currently trading at 0.7929. We now expect support to hold on moves approaching 0.7910 while any upward push will likely meet resistance around 0.7990.

Having edged higher on open the Kiwi gave up early gains on Monday shifting back below 0.73 U.S cents as investors digested recent moves and Saturday’s election result. With a coalition needed for the Nationals or Labour to form government investors looked to take profit and sold down NZD holdings. The New Zealand dollar has been one of the best performing major units through the last month and markets seemed content capitalising on gains ahead of further political uncertainty. Having touched intraday lows at 0.7248 the Kiwi opens this morning buying 0.7250 U.S Cents as attentions turn to Thursday RBNZ rate statement and policy announcement for direction moving forward.

Political instability within the EU saw an initial rise on the Great British Pound after markets remain on edge following Sundays German election result. This sent the GBP/EUR cross higher with Cable hitting an overnight high of 1.3570. Gains were erased as investors continue to digest Moody’s downgrade of the UK’s sovereign rating on Friday to Aa2 along with continued Brexit negotiations this week. North Korea did no favours overnight to ease current tensions as we saw bids back into safe haven currencies. Cable dropped to eventual lows of 1.3430 ahead of this evenings FPC Statement which measures the stability of the current financial system in the UK. Sterling opens this morning at 1.3470.

The Euro Dollar suffered at the hands of an appreciating greenback overnight as FOMC Member Dudley spoke overnight sparking fresh hopes of interest rate hikes before the end of 2017. Dudley said that he expected to see inflation reach the Fed’s target of 2% in the ‘medium term’ and ‘the Federal Reserve will likely continue to remove monetary policy accommodation gradually’. EUR/USD headed south and touched an eventual low of 1.1833. On the data front, German confidence edged a shade lower from 115.7 in August to 115.2 in September but still remains close to the highest level on record and continues to point to optimism among businesses, but it appears to have peaked mid this year in July.