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The Australian dollar remains supported at 0.78

By Brett Ottawa

The Australian Dollar traded in a narrow band yesterday, seeing an overnight high of 0.7860.  The minutes from the latest Reserve Bank policy meeting showed optimism for the local economy, with the continuation of a neutral stance on monetary policy. The market saw little movement following the release, trading sideways into the European open. The Aussie saw an eventual low during the North American session of 0.7818 after strong support for the greenback. President Trump met with hawkish Fed candidate John Taylor who could potentially replace Janet Yellen in four months. The Australian Dollar opens this morning at 0.7845 ahead of this month’s MI Leading Index release.

The New Zealand Dollar traded within a 50-pip range intraday on Tuesday failing to break above resistance around 72c against the Greenback. Consumer prices rose by 0.5% in the September quarter, which was slightly higher than expectations of a 0.4% rise. On an annual basis, consumer prices were up 1.9%, just shy of the mid-point of the target range. Prices were boosted by food and housing costs. The latest dairy auction didn’t help the pair; NZD/USD saw a low of 0.7148 soon after the release of the GDT dairy auction. Figures showed the GDT price index dropped 1 percent in the auction overnight and whole milk powder declined 0.5%. Prices fell after an unexpected decline in the previous auction a couple of weeks ago. The economic calendar looks quiet for today’s local session, still hopeful for a result on the new coalition government today.

The Great British Pound dropped through trade on Tuesday, touching 1 week lows after a dovish statement from BoE president Mark Carney offset an earlier uptick in inflation. The highly anticipated CPI print showed price pressures increased through September and added fuel to expectations the Bank of England’s monetary policy committee (MPC) will raise rates next month. Touching intraday highs at 1.3287 cable then turned lower as BoE head Mark Carney proffered a somewhat dovish testimony when addressing the Treasury Select Committee in London. Markets questioned Carney’s comments and suggested the BoE would fail to follow through with longer term monetary policy adjustments with just 2 hikes now expected through the coming 12 months. Edging through 1.3200 cable losses were consolidated after Brexit talks appeared to stall again, as discussion surrounding trade have been pushed back to December. Falling to intraday lows at 1.3157 we open this morning at 1.3185 as attentions turn to wage growth and unemployment claims for direction through Wednesday. 

The US Dollar is stronger this morning when valued against most of its counterparts as speculation grows that US President Donald Trump could replace current US Federal Reserve chair Janet Yellen with a more hawkish policymaker. On the data front yesterday, we saw the release of US import prices which recorded a better-than-expected result up by 0.7% in September and now up 2.7% a year earlier. All attentions turn now to the release of the Federal Reserve’s latest Beige Book on economic conditions. The greenback is currently trading at 1.1764 against the Euro and 1.3184 against the British Pound.