Home Daily Commentaries Aussie consolidating around 0.7050 amidst light holiday trading

Aussie consolidating around 0.7050 amidst light holiday trading

Daily Currency Update

With markets returning from yesterday’s New Years eve holiday, the Australian dollar is currently buying 0.7055 US cents. The Aussie has largely traded flat against the greenback over the holiday period, anchored between 0.7038 and 0.7065 amidst thin trading.

This week has been started on a positive note for the AUD as US president Trump made comments on the status of trade negotiations with China. The comments, which were made via twitter, proclaimed that “big progress” was being made after a “long and very good call” with Chinese President Xi.

This week is expected to be a quiet one for the Aussie with no market moving events on the docket. The RBA are due to release their commodity index SDR for December this afternoon and although it is not expected to move markets it will be closely watched as a leading indicator of export price changes, a vital input for GDP.

Key Movers

The New Zealand Dollar remains relatively unchanged to open the new year, sitting just above the 0.67 level at 0.6715. Moving into the new year, trading remains limited as most of the world continues to enjoy the festive season, including New Zealand.

The last week of December was also relatively quiet with little on the domestic calendar to excite the market. There was however a consumer confidence survey which did end the year on a positive note, rising from 118.6 to 121.9 in December. Despite the buoyant news, the global environment continues to be shaky as concerns over global growth and politically instability continue to dampen market sentiment.

Moving into the New Year, the Kiwi continues its New Year public holiday into its second day and has little on the domestic calendar to release. Attentions will remain affixed to global headlines for direction.

The Great British Pound finished the year with a bang rallying to three week highs as continued selling pressure for the greenback saw cable hit levels of 1.2810.

With Parliament due back from holidays in the UK, volatility is set to spike as markets ramp up their positions ahead of an eagerly awaiting vote in the commons on Prime Minister Mays and the European Union’s withdrawal agreement set for the week commencing 14th January.

Rebounding from 18-month lows during the month of December, the GBP/USD pair traded higher to end the year in positive territory after adding 0.4% on the last day of the year. Testing both the 50-day moving average and resistance at the 1.28 handle, Sterling finished the year at 1.2740.

On the agenda for the first day of trading in the UK is Manufacturing PMI for December as the Great British Pound opens this morning at 1.2735.

The Greenback has done little over the holiday period as volumes remained thin during the festive season as expected. There has been some minor gyrations however with the US Dollar Index (DXY) shifting slightly lower to 96.15, a fall of 0.26%.

The big news moving into the holiday season continue to dampen global risk appetites as we open the trading in the new year. Concerns over global growth and political instability have only been exacerbated by President Trumps partial shutdown of the government which looks to have no end in sight. The news saw the bellwether USD/JPY cross rate tumble to close out 2018 at around 109.75, below the psychological handle of 110.00 and the 200-day moving average.

Moving into the start of 2019, trading remains limited to start off the new year with the headlines continuing to drive direction.

The Euro was slightly stronger against the U.S. dollar on Monday as optimism about progress in the U.S.-China trade dispute hurt its safe-haven allure. Although the Euro has gained versus the Greenback in recent weeks, economic growth and inflation in Europe remain much weaker than the European Central Bank’s expectations. The EUR/USD pair closed Monday at around 1.1450 and is poised to extend its advance in still thin, holiday's trading.

Looking ahead this week on the release front and the European Union's December Manufacturing PMI will be out this Wednesday and downward revisions to initial estimates could cool down EUR's advance. The Markit Manufacturing PMI for the US will also be out on Wednesday previously at 53.9.

From a technical perspective, the EUR/USD pair is currently trading at 1.1467. We continue to expect support to hold on moves approaching 1.1425 while now any upward push will likely meet resistance around 1.1485.

The Canadian dollar ended 2018 with its worst annual performance in three years, hitting a 19-month low against its U.S. counterpart earlier in the day before reversing its decline as oil prices and stocks rallied. The Canadian dollar was trading unchanged at 1.3635, or 73.34 U.S. cents. The Greenback fell against a basket of major currencies as increased risk appetite weighed on demand for safe-haven currencies.

Looking ahead this week on the release front and it all kicks off on Thursday with the release of Purchasing Managers' Index (PMI). On Friday we will see the release of Canadian Jobless Rate which is expected to rise from 5.6% to 5.7%.

From a technical perspective, the USD/CAD pair is currently trading at 1.3628. We continue to expect support to hold on moves approaching 1.3623 while now any upward push will likely meet resistance around 1.3650.

Expected Ranges

  • AUD/NZD: 1.0470 - 1.0550 ▼
  • GBP/AUD: 1.7950 - 1.8200 ▲
  • AUD/USD: 0.7000 - 0.7080 ▼
  • AUD/EUR: 0.6100 - 0.6200 ▲
  • AUD/CAD: 0.9570 - 0.9640 ▼