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Last week recap
The Australian Dollar is stronger this morning when valued against the Greenback. The Aussie hit a two week high of 0.7143 on the back of U.S. Dollar weakness. The U.S. dollar dipped on Monday after retail sales data for September missed economists’ expectations.
On the data front today all eyes will be on the Reserve Bank of Australia (RBA) Monetary Policy Meeting Minutes at 11:30am AEDT. We will also see the release of the Westpac Leading Index for September, latest at 0.1%.
From a technical perspective, the AUD/USD pair is currently trading at 0.7129. We continue to expect support to hold on moves approaching 0.7085 while now any upward push will likely meet resistance around 0.7200.
New Zealand Dollar
AUD / NZD
AUD / NZD Expected Range:
The New Zealand Dollar has started the week in positive territory, performing well against all the key crosses. Opening this morning at 0.6550 against the Greenback, the Kiwi also saw the NZD/AUD up 0.3% to 0.9175 and NZD/EUR up 0.3% to 0.5650. It was an otherwise, slow day for the NZD which otherwise remained flat against its counterparts.
The Kiwi was well supported on Monday with little on the domestic calendar. Amid the volatility seen in global markets, the New Zealand Dollar remained relatively insulated from a number of disputes currently roiling financial markets. Within this context, the USD and GBP softened to slightly buoy the NZD.
Moving into Tuesday, the New Zealand Dollar is set to digest the Q3 CPI report which looms as a key source of volatility for the day. The market will also keep all eyes on the developing conflicts around the world.
GBP / AUD
GBP / AUD Expected Range:
1.8350 – 1.8600
The Great British Pound moved marginally higher through trade on Monday, edging back through 1.31 to touch intraday highs at 1.3180. Pushing off one week lows Investors optimism surrounding broader Brexit conversations remains largely intact, however domestic political instability and uncertainty surrounding the Irish land border has disrupted recent sanguinity.
Markets are conscious that even if May and the EU can reach an agreement prior to, during or in the wake of this week’s summit it will need to be ratified and passed by Parliament at home. This remains Prime Minister May’s biggest stumbling block. Opposition within her own Tory establishment and the DUP suggest backlash is probable and ensures a binary Brexit outcome is still possible.
Attentions remain squarely fixed on the Brexit narrative this week with the Possible upside should we see definite progress when the summit commences Thursday.
United States Dollar
AUD / USD
AUD / USD Expected Range:
0.7100 – 0.7200
The US Dollar Currency Index (DXY) has held firm overnight at the 95.00 handle after drifting lower from last weeks equities rout and has followed a similar path over the past 24 hours. S&P 500 dropped 0.6% along with the Dow Jones at 0.35%.
United States Retail Sales disappointed putting further pressure on the greenback. A rise of 0.1% for the month of September was much lower than the expectation of 0.5% as a rebound in motor sales were offset by a drop in consumer spending at restaurants. With a selloff in recent equities this could flow on to households and the expectation of a lower spending over the coming months.
Empire State Manufacturing Index Rose to 21.1 in the month of October, signaling the continued growth of business activity in he State of New York and at a faster pace than the previous month.
The USD/JPY extended its declines from last night, falling from its top of 1.1220 to an overnight low of 1.1165 as risk sentiment continues to sour from the continued decline of equities.
AUD / EUR
AUD / EUR Expected Range:
0.6140 – 0.6200
On the back of U.S. Dollar weakness the EUR / USD pair traded at a high of 1.1605. Unfortunately the Euro was unable to remain above 1.1600 as political woes in the EU and the UK spurred more risk aversion. It was reported the EU and the UK weren't able to reach a Brexit agreement over the weekend.
On the data front today the EU will release its August trade balance data, while Germany will release the ZEW survey which is expected to show that sentiment deteriorated further. We will also see the release of Italian Trade Balance also for the month of August.
From a technical perspective, the EUR/USD pair is currently trading at 1.1579. We continue to expect support to hold on moves approaching 1.1575 while now any upward push will likely meet resistance around 1.1620.
AUD / CAD
AUD / CAD Expected Range:
0.9200 – 0.9320
The Canadian Dollar opens higher this morning with the Greenback unable to hold on to the 1.3000 handle. During Mondays day of trade the Canadian Dollar remained steady against most of its rivals (but the Japanese Yen). The USD/CAD moved within a 15 pip range during Asian trade and for most part of the European session before a heavy sell off sparked by risk-off in European equities and the latest geopolitical tensions between the US and Saudi Arabia.
The USD/CAD rate dropped down to a low of 1.2960 before recouping some losses opening this morning at the time of writing at 1.2990.
Aiding the CAD strength was also the release of Bank of Canada’s Q3 business outlook survey, in the report it showed that Canadian Firms were upbeat over the third quarter of the year. The central bank looks at this to guide monetary policy and even though a hike was expected next week, this survey does solidify that.
Looking ahead, today sees the release of the Foreign Security Purchases.
On the technical front, support now sits at 1.2950 and 1.2924 with resistance up around 1.3000 and 1.3048.
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