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Aussie finds support against all other major crosses

By OFX

The Australian Dollar fell overnight to a low 0.7330 against the Greenback, its lowest level in over a year, before recovering on the back of a rebound in US equities. The Aussie is currently trading at 0.7354, 0.19% higher at Thursday, but is down 5.8% so far in 2018.

Australia will release some minor data figures today during the upcoming Asian session which include New Homes Sales for the month of April and Private Sector Credit figures for the month of May. Again today the performance of Chinese financial markets look set to dictate the direction of the Aussie Dollar.

From a technical perspective, with the Aussie buying some support, we continue to expect to hold on moves approaching 0.7345 while now any upward push will likely meet resistance around 0.7400.

The New Zealand dollar is weaker this morning when valued against the US Dollar. The Kiwi hit a fresh two year low of 0.6745 against the Greenback on Thursday after the Reserve Bank of New Zealand doubled down on May's message that Kiwi interest rates will remain at record lows for "some time to come”. Leading to further speculation that the next move in official interest rates from the RBNZ may be lower, not higher. The RBNZ left the Official Cash Rate on hold at 1.75%.

Looking ahead today and its fairly light on the macroeconomic calendar with the only release Building Consents for the month of May and consumer confidence data. Today the kiwi dollar will most likely follow the lead of equities.

From a technical perspective, the NZD/USD pair is currently trading at 0.6749. With key technical levels that have served the test of time over the past 18 months broken we continue to expect support to hold on moves approaching 0.6740 while now any upward push will likely meet resistance around 0.6850.

The Great British Pound hit a fresh low of 1.3050 overnight but managed to regain some of its losses to reach 1.3072 this morning. In a day dominated by headlines, Traders looked for clues in the EU Summit, the Bank of England’s Haldane’s speech and news from across the Atlantic for direction.

The Sterling enjoyed a mostly benign economic calendar yesterday with market attention keenly focused on developments at the EU summit. Unsurprisingly Brexit took the focus from a British perspective with EC President Juncker confirming that the EU is working on preparations for a no-deal Brexit in parallel with an ordinary and proper withdrawal agreement. The frustration from Juncker was clear as he lay the blame at the lack of consensus by the UK government on the future relationship between the EU and UK. With little traction on the on-going Brexit debate in sight, the Sterling took the news poorly with significant downward movement and the Euro is now changing hands at 0.8842.

Attentions then turned to the Bank of England’s Haldane who outlined his case for a rate hike. A decidedly dissenting vote, Haldane noted that a rate increase would lower the risk of needing to tighten policy less gradually in the future and cause a sharper adjustment in the economy. The market however, for the most part shrugged off this sentiment and was again whittled further lower.

Traders now turn to a packed economic calendar to drive momentum with the UK releasing GDP and current account figures. The closely related Euro also has a number of important releases with CPI figures, German retail sales and the on-going EU summit to digest.

The US dollar found support against haven counterparts through trade on Thursday as trade war tensions abated. Investors largely shrugged aside a softer than anticipated Q1 GDP print following amendments to foreign investment restrictions and a suggestion a broader process of increased security review will be used instead to protect American technologies. The softening approach help bolster demand for risk appetite and pushed the USD back through 110 JPY and kept the Euro below 1.16 USD. Having held onto gains against emerging markets and commodity driven assets like the AUD the US dollar index was up a further tenth of a percent, completing a 1 % advance through the last two sessions.

Attentions remain firmly focused on key risk events moving into the weekly close with volatility expected to continue through the short term. The conclusion of the 2 day European summit and key inflation prints across the US, UK and Europe will help govern demand for risk and provide guidance as to further divergence in central bank monetary policy. With demand for the world’s base currency Underpinned by the upbeat interest rate outlook we expect the USD will largely hold onto recent gains reinforced by a departure away from emerging markets.

The Euro closed slightly stronger versus the USD on Yesterday’s session, managing to stay above the important 1.15 level at 1.1570 (+0.10%). The Euro was initially demanded versus the GBP as the European session started but couldn’t managed to break the 1.16 level on the upside.

That initial strength somehow reverted as more uncertainties around a harder than expected Brexit are starting to appear and some negative performance from Italian bonds following PM Conte comments about him potentially not backing up a final statement around the migration theme if issues are not addressed.

From a data perspective, German inflation came in line with estimates at 2.1%, which probably helped the Euro to find some support above 1.15 and we will be getting further inflation readings tonight, with France and Eurozone CPI numbers plus Germany’s unemployment change.

Keep an eye on headlines coming from the EU Summit and the key 1.1520 and 1.16 levels (short-term support/resistance) for some cues on the next moves for the EURUSD.

Great recovery Yesterday for the loonie, strengthening around 0.70% versus the USD and breaking below the important 1.33 level, to around 1.3250.

USDCAD has been driven lately by the risk-off sentiment following all the trade war developments, OIL and recent declarations from BOC Governor Poloz. In that sense, it seems like the market decided to interpret Poloz comments differently Yesterday and now the probabilities for a rate hike in July have recovered all the lost ground from the day before, suggesting Poloz’s would support a rate hike if there are improvements on the NAFTA negotiations. CAD was also supported by the spike in Oil prices.

From a technical perspective, we are still trading on that 1.32/1.33 range, so any break of those will probably suggest further movements. Important to note that we will get another glance at the current economic situation in Canada as GDP and BOC Business Outlook will be released tonight.