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Australian Dollar hits weekly high – Focus on U.S Economic Docket

By JOEL HOLMES

The Australian dollar edged upward through trade on Wednesday pushing back through 0.7830 and testing intraday highs at 0.7875. With little domestic data on hand to drive direction the AUD found support in wider USD weakness as investors reacted to a proposed short list of candidates to replace Janet Yellen as Fed and FOMC Chair. Suggestions Jerome Powell is a frontrunner in the race to the central banks top job encouraged a USD sell off. A known dove, it is feared Powell may interrupt the Fed’s existing monetary policy plan and waylay expected rate hikes. With attentions turning to Friday’s highly anticipated non-farm payroll print and wage growth reports investors seem content managing positions through Thursday with local direction driven by retail sales and trade balance prints. We anticipate support on moves through 0.78 and approaching 0.7730 with resistance capping gains upward of 0.7890 as investors look to sell into AUD rallies.  

The New Zealand Dollar remains largely flat against the Greenback, opening this morning at 0.7160. The Kiwi did have some positive movements during the American trading session, reaching a high of 0.7204. However, this has since been trimmed away to reach current levels. The Kiwi initially lost ground against its counterpart when US non-manufacturing PMI numbers outperformed. This was then counter-balanced by increased speculation on Trumps next choice for Federal Chair with the significance being that the resulting decision will influence monetary policy going forward. Across other major currencies, the New Zealand Dollar also remains relatively flat with the exception being the AUD. The Kiwi fell against the Aussie to currently hold just above the 0.91 level as the AUD exceeds expectations. Traders now turn to Retail Sales and Trade Balance news from across the Tasman for further direction. 

The Great British Pound advanced overnight against its US counterpart reaching a daily high of 1.3290 on the back of upbeat services PMI which showed that activity in the sector grew in September, with the index up to 53.6 from 53.2 in August. Prime Minister Theresa May endured a luckless conference speech overnight with reports now surfacing she is losing support and could be gone by Christmas. The UK macroeconomic calendar has little to offer today with no scheduled data releases. The GBP/USD pair is currently trading at 1.3238. We now expect support to hold on moves approaching 1.3210 while any upward push will likely meet resistance around 1.3300.

The U.S. Dollar saw little movement over the past 24 hours as the markets position themselves for a heavy macroeconomic docket to end the week. There was a change in sentiment for the greenback during the Asian session as investors saw bets strengthen on Jerome Powell to become the next Fed Chair in February, a well renown dovish board member of the central bank. The U.S. Dollar Index (DXY) was down 0.18% for the day with equities flat. United States ADP Non-Farm employment figures came in slightly higher than market expectation, creating 135,000 new jobs for the month of September. The Euro remained above key support at 1.1720 and up 0.2% for the day after enjoying a brief run up to an intraday high of 1.1786. Fed Chair Janet Yellen only spoke briefly this morning with no comments on monetary policy, thus markets were limited in their movements. Investors focus their attention to upcoming unemployment claims and trade balance figures this evening out of the United States.