Home Daily Commentaries Australian dollar opens higher on improved risk appetite

Australian dollar opens higher on improved risk appetite

Daily Currency Update

The Australian dollar is slightly stronger when valued against the Greenback on the back of improved investor risk appetite. The Aussie dollar reached an overnight high of 0.7076.

On the release front today, we will see January Home Loans, seen up 1.0% following a 6.1% decline in December, alongside Investment Lending for Homes. The NAB will release February Business Confidence and Business Conditions indexes, both seen declining from January's readings.

From a technical perspective, the AUD/USD pair is currently trading at 0.7068. We continue to expect support to hold on moves approaching 0.7020 while now any upward push will likely meet resistance around 0.7090.

Key Movers

The New Zealand dollar opens this morning higher against the Greenback after initially falling to a low of 0.6787 in the early Asian session. The NZD/USD pair gained traction and touched a high of 0.6835 which was supported by an improvement in risk sentiment. Stronger than expected US Retail Sales numbers may have also been a contributing factor. Meanwhile, local data released by NZStats showed that electronic card retail sales rose by 0.9% in February, following on from a 1.8% rise in January.

Spending rose in five of the six retail industries. Spending on groceries and liquor increased by 1%. There were also sizeable increases in spending on fuel +1.3% and hospitality +0.7%. Spending on fuel came off the back of rising fuel prices. Markets didn’t react to the data.

Looking ahead, there is tier 2 data due out today, ANZ’s Truckometer which measures truck and other traffic movements to gauge the economic temperature.

Overnight the Pound rose sharply in volatile trade after media reports said that Prime Minister Theresa May was preparing to offer an amended version of her Brexit deal to parliament in a key vote on Tuesday. The UK lawmakers will now decide on Tuesday, whether or not Prime Minister Theresa May’s deal is enough. In the case it gets rejected, they can vote on an extension to the departure date beyond March 29 on Tuesday.

On the UK data front today, we will see the release of monthly Gross Domestic Product (GDP) along with Manufacturing and Industrial Production.

From a technical perspective, the GBP/USD pair is currently trading at 1.3165. We continue to expect support to hold on moves approaching 1.3090 while any upward push will likely meet resistance around 1.3190.

The US Dollar Index, which measures the Greenback’s strength against a trade-weighted basket of six major currencies, moved a touch lower on Monday on the back of mixed US Retail Sales numbers. US Retail Sales bounced back from weakness in December indicating consumers may still be able to help support economic growth after a dismal end to 2018. The Commerce Department said January Retail Sales rose 0.2%.

Looking ahead, US CPI is due out today which will most likely attract a lot of attention.

The Euro bounced off its bearish trend overnight after finding support at 1.1220 on multiple occasions to start the week. Opening at 1.1231, the EUR/USD saw intraday lows of 1.1217 as it continued to trade off last week’s dovish position by the European Central Bank.

Despite a pullback in German Industrial Production figures (-0.8%) for the month of January, the Euro saw a reversal of fortunes heading into the European session seeing an intraday high of 1.1250 as an improvement in risk sentiment was seen in markets.

All eyes will be focused on a week of Brexit decisions as a No deal Brexit and Vote to extend Article 50 is on the table again. The EUR/GBP was smashed overnight from 0.8670 to as low as 0.8530 at one point with Sterling being a major mover higher off the back of Theresa May potentially securing some concessions from the EU.

The EUR/USD opens this morning at 1.1245 with the release of CPI figures in the United States this evening at the top of the agenda.

Monday saw the Canadian dollar edge higher against the Greenback as oil prices rose. Gains were limited however as concern remains about the outlook for the domestic economy despite Fridays strong labour market data.

The gains in oil prices were largely attributed to commentary from Saudi energy minister Khalid al-Falih who indicated that OPEC-led supply cuts were unlikely to be curtailed before June. This saw USD/CAD rise to 1.3404 with AUD/CAD falling from 0.9479 to 0.9463 before stabilising a few points higher into the Sydney open.

USD/CAD resistance is now seen at 1.3471 whilst downside moves are expected to find support on approach to 1.3362.

Expected Ranges

  • AUD/NZD: 1.0300 - 1.0450 ▼
  • GBP/AUD: 1.8500 - 1.9000 ▲
  • AUD/USD: 0.7020 - 0.7120 ▲
  • AUD/EUR: 0.6200 - 0.6320 ▲
  • AUD/CAD: 0.9430 - 0.9520 ▲