Home Daily Commentaries PMI Day, FOMC Member Speeches and The Beige Book all Today

PMI Day, FOMC Member Speeches and The Beige Book all Today

Daily Currency Update

The United States Dollar enjoyed a mostly quiet day yesterday with little on the calendar to excite the market. Trading sideways for much of the day against its G10 counterparts, yet, the US Dollar Index (DXY) opens higher against a basket of currencies at 96.36 up 0.44%. Economic fundamental from Europe which saw the EU market PMI figures miss expectations mainly due to trade tensions and slowing global growth.




On the data front today for the US we have Markit Manufacturing PMI, Markit Service PMI and Markit PMI Composite all released at 9:45 am eastern time. Home Sales and Home Sales Change follow at 10. We also have FOMC member speeches with Bostic and Mester both speaking at 1 pm and 1:10 pm respectively. At 2 pm the Fed's Beige Book is released which reports on current US economic situations.

Key Movers

Tuesday’s sessions saw the Loonie drift lower against the greenback as softness in oil prices and equity market declines hurt sentiment. It’s worth noting that it did still trade in a tight range ahead of today's monetary policy decision from the Bank of Canada. The USD/CAD opens this morning Just above first support of 1.3071 at 1.3092. WTI crude retreated 4.4% yesterday following comments out of Saudi Arabia indicating more supply will be added to support the Iranian shortfall due to imposed sanctions.






We have been saying all week today's monetary policy announcement by the BOC is the key risk event for the loonie. Weaker than expected domestic data has pressured the currency, however, futures markets are still pricing a 25bp rate hike as a 90% chance. The rate hike would represent the 5th such move since July 2017 as the BoC continues to be of the view that the domestic economy is operating near capacity. Given a hike is virtually 100% priced in, the decision itself is unlikely to bring any upside to the CAD, however, the accompanying press conference 45 minutes later will add the color market participants are waiting for on future neutralization of interest rates.



Technical levels to watch out for on the USD/CAD are 1.3072 and 1.3029 on the downside with any topside moves expected to meet resistance on moves approaching 1.3114 and 1.3157.


The proposed Italian budget has been thrown out by the European Commission in an unprecedented move against an EU member. Despite the planned deficit being below the 3% level which is permitted under EU guidelines, the commission sees 2.4% as being too high, especially given previous administrations efforts to run a deficit of less than 1% to reduce the countries eye-watering debt pile. The debt in monetary terms is the EU's highest at €2.2trillion with only Greece’s debt to GDP reading of 178% beating Italy's 131%. The Italian government now has three weeks to come up with a revised plan which in turn could be rejected.








This is set to rumble on for a while capping euro and stock market gains. Adding to the shared currencies woes has been this morning’s PMI results with all the significant results missing target except French Services PMI which printed green. The cyclical slowdown in the Eurozone is playing out in the PMI numbers which were posting record numbers this time last year. EUR/USD is down to 1.1405, GBP/EUR is up to 1.1330.


Beleaguered UK Prime Minister, Theresa May is set for another Brexit showdown with her members today with an appearance before the Tory backbench 1922 Committee due in Westminster. The group of backbenchers will no doubt give the PM a rough ride with many hardline Brexiteers likely to pour scorn on her plans for a future relationship with the bloc. The PM stated earlier this week that a withdrawal agreement was “95%” complete however the Irish border conundrum remains, meaning the UK may be forced to stay within a Customs Union with the EU to stop a hard border being needed between Northern Ireland and Ireland. The complexities of solving this issue are where the divisions lie. GBP/USD made a brief appearance above 1.30 yesterday lunchtime before rapidly retreating to trade close to the 1.2940 handle.


The Australian Dollar is slightly stronger this morning when valued against its American counterpart. Opening the morning at 0.7085, in familiar moves was sold off to critical support levels of 0.7054 as equities continue to bounce around, most notably energy and industrial stocks pulling the ASX 200 lower.







Geopolitical risks continue to hamper any upside through the 71 US cent handle in the short term as there was little to come out of RBA Governor Guy Debelle’s panel discussions yesterday on future monetary policy decisions.



The Australian dollar managed to recoup losses, bouncing off support to see overnight highs of 0.7090 as Federal Reserve member Raphael Bostic came out in favor of a further hike this year but most notably mentioned that there was no need to keep the “Foot on the gas pedal.”


The New Zealand dollar remained mainly range-bound through trade on Tuesday bouncing between intraday lows at 0.6535 and session highs at 0.6570. Despite ongoing pressure on equities and US treasury yields, amid a heightened risk-off environment, moves within currency markets have mainly been modest. Traditional haven plays are seeing traction with the JPY and CHF finding support; however, the contagion and fear that has plagued stocks appear not to have spread to currencies at this point.










With little macroeconomic data on hand, we expect the NZD will remain range-bound, responding to newswire headlines as risk sentiment continues to evolve. While well supported on moves approaching 0.6435 we expect upside momentum to be mostly muted as pressure on commodities, led by oil, and the broader risk-off tone weigh on investors’ appetite to drive the Kiwi higher and extend on recent moves toward 0.66.

Expected Ranges

  • USD/CAD: 1.3029 - 1.3157 ▲
  • EUR/USD: 1.1378 - 1.1479 ▼
  • GBP/USD: 1.2887 - 1.2990 ▼
  • AUD/USD: 0.7076 - 0.7106 ▼
  • NZD/USD: 0.6534 - 0.6567 ▼