Daily Currency Update

Get access to our expert daily market analyses and discover how your currency has been tracking with our exchange rate tools

The Australian dollar is rallying

By Brett Ottawa

The Australian Dollar closed the week higher after a lower than expected inflation reading out of the United States in Friday evening. Opening the day at 0.7820 against the greenback, the Aussie traded in a tight twenty pip range during the domestic session. The majority of price action occurred during the release of the US inflation report which showed a 0.1% rise in core inflation versus 0.2% expected. The result sent the Australian dollar to a three week high of 0.7896 and opens slightly lower this morning at 78.80 US Cents. Further direction will be seen from the release of the latest Monetary policy minutes due for release on Tuesday.

The New Zealand Dollar ended the week on a high, closing in on the 72 US cent mark for the first time since the start of October. Opening Friday morning at 0.7125, Business NZ Manufacturing index came in at 57.5, showing a healthy level of expansion. With little movement during the domestic session, the Kiwi was bolstered to a high of 0.7180 following the release of inflation data from the United States and a gain of 0.8% for the day. With the country hanging onto hope of a formation of government at any point today, there is the potential for heightened volatility heading into the new week. The New Zealand Dollar opens this morning at 0.7170. 

The Great British Pound rallied through trade on Friday, moving higher on suggestions a transitionary Brexit deal will be offered. Plunging early on commentary from a German parliamentarian, wherein it was suggested “time is running out for Britain to negotiate the deal it wants” the Pound then surged toward near two week highs following suggestions the European Union would offer a two year transitional Brexit deal that would smooth the way for longer term negotiations. Edging through 1.33 Sterling found added support in softer than anticipated U.S CPI data. With both core and broader inflationary pressures falling short of market expectations the dollar fell broadly across the board allowing the Pound to touch intraday highs at 1.3344. Having highlighted its vulnerability to political pressures and the Brexit process the GBP remains exposed to wider volatility as negotiations continue and we expect markets will sell into rallies approaching 1.34 through the near term. Attentions now turn to Tuesday’s CPI print and commentary for BoE Governor Carney, Wednesday’s wage growth data and Thursday’s retail sales read for macroeconomic direction.   

On Friday we saw the release of both monthly retail sales and Consumer Price Index data in the United States. The Consumer Price Index rose 0.5 percent in September on a seasonally adjusted basis. Over the last 12 months, the all items index rose 2.2 percent. Both readings were below market expectations. The softer-than-expected inflation data still not enough to take the Fed out of the tightening path for this year. It’s a quieter week ahead in the US, with September’s industrial production numbers due out on Wednesday and the US Federal Reserve Beige Book summary on economic conditions released on Thursday.