Australian Dollar Steady ahead of Employment Release
Thursday 21 February, 2019
Daily Currency UpdateThe Australian Dollar on Wednesday saw a slight decline during the domestic session as wage prices missed expectations. Released during the morning, the Wage Price Index which is now considered a key part of any future interest rate decisions saw a reading of 0.5%, missing expectations of 0.6% for the quarter and sitting at 2.3% on an annualised basis.
Drifting from open of 0.7167, The AUD/USD retreated to an intraday low of 0.7150 following the news and despite recovering at the close of play in Asia, continued its slide in offshore markets to touch 0.7140.
Losses were erased in the early morning as the Australian Dollar touched 0.7180. Investors sold off the greenback in anticipation of a dovish Federal Reserve outlook in the release of FOMC minutes.
The Australian Dollar opens at 0.7162 and looks towards the release of employment change for the month of January. Resistance lines continue to be drawn at the 0.7200 handle with support at 0.7105.
Key MoversThe New Zealand dollar is steady this morning when valued against the Greenback trading around the 0.6850 mark. Yesterday we saw the release of the Global Dairy Trade price index which was up marginally in the auction overnight with a gain of 0.9%. The result was the sixth consecutive gain but nowhere near the hefty 6.7% increase at the last auction two weeks ago.
On the data front there are no scheduled releases today in New Zealand. With the release of the U.S. the FOMC minutes to be released today, certainly has the potential to cause some market volatility.
From a technical perspective, the NZD/USD pair is currently trading at 0.6857. We continue to expect support to hold on moves approaching 0.6840 while now any upward push will likely meet resistance around 0.6890.
The Great British Pound has stabilised against the Greenback after posting sharp gains on Tuesday. Wednesday’s session say the GBP/USD move between levels of 1.3011 and 1.3109 and any moves higher have been capped by Brexit which remains a challenge for the pair.
On the data front CBI Industrial Order Expectations rebounded with a score of 6, crushing the estimate of -5 points. The survey of 366 manufacturers found that both total and export order books strengthened modestly on the previous month, while remaining comfortably above their respective long-run averages.
On the technical front, short-term support sits at 1.2960 followed by 1.2920, on the up-side resistance can be seen at 1.3100 and 1.3160
Opening at 96.50, the US Dollar Index (DXY) was largely unchanged in a relatively quiet day before the lead up to the release of FOMC minutes. During the North American session we saw the greenback sold off to 96.30 as market participants positioned themselves ahead of the Federal Reserve comments that confirmed they are clearly on a path of neutrality. After slumping to a two week low, the DXY paired losses to see a 0.03% gain overnight to open at 96.56 this morning.
Further direction for the greenback is expected to be seen this evening with the released of core durable goods orders and the Philly Fed Manufacturing Index.
The Euro struggled to find a single directional bias through much of Wednesday bouncing amid a 30-point range as investors sidelined larger bets ahead of the Federal Reserve’s FOMC meeting minutes. Having touched intraday highs at 1.1370 the combined unit retreated in the wake of the Fed minutes as policymakers left the door open for a possible rate hike in the second half of the year. AS balance sheet correction and monetary policy tightening remain in play the gap between US and European monetary policy will likely weigh on the Euro and cap significant upward moves through the short to medium term.
Key Support remains intact at 1.1250, however a break below this handle could prompt an extension into bearish territories and a move toward 1.10. While today’s docket includes a host of manufacturing and services data, broader direction will be influenced by global risk appetite and expectations for ECB policy announcements at the upcoming March 7th meeting.
We expect the Euro to trade between recent ranges at 1.1250 and 1.14, however a soft macroeconomic docket could compound fears for growth and force a break of supports. In contrast, a strong read will likely add a short upward bias but will be unlikely to fuel extended gains as the ECB will be looking for sustained improvement across economic indicators before shifting its policy focus.
The Canadian dollar is weaker this morning when valued against the Greenback. However the markets remain quite optimistic over the U.S-China trade talks, and stronger risk appetite is bullish for the Canadian dollar. The U.S. has recently threatened to impose stiff new tariffs as of March 1, if the deadline is moved, we can expect the Canadian dollar to respond with strong gains.
On the data front there are no scheduled releases today. All eyes will be on Thursdays releases. In the U.S., key events include durable goods and unemployment claims, and Canada will release ADP nonfarm payrolls.
From a technical perspective, the USD/CAD pair is currently trading at 1.3177. We continue to expect support to hold on moves approaching 1.3140 while now any upward push will likely meet resistance around 1.3220.
- AUD/NZD: 1.0320 - 1.0520 ▲
- GBP/AUD: 1.7950 - 1.8350 ▼
- AUD/USD: 0.7050 - 0.7190 ▼
- AUD/EUR: 0.6280 - 0.6350 ▲
- AUD/CAD: 0.9380 - 0.9480 ▲