Home Daily Commentaries The Australian dollar maintains bullish momentum

The Australian dollar maintains bullish momentum

Daily Currency Update

The Australian Dollar continued its advances higher overnight, climbing 0.45% to 0.7150 in early trading this morning. Opening the week in positive fashion following a broad sell off on the greenback after dovish remarks from FOMC chairman Jerome Powell, a reversal out of safe haven currencies remained in play as the Aussie continued its bullish momentum. The release of weaker than expected ISM non-manufacturing figures from the United States overnight only cemented gains for the domestic currency, reaching 3-week highs.

As the AUD/USD looks to claw its way higher it remains in a bearish trend to start the year, remaining below both 50 and 200 day moving averages on the daily charts. Both Trade Balance and ANZ Job Advertisements are scheduled for release today and will be the key drivers this morning for investors.

From a technical perspective, the AUD/USD pair is currently trading at 0.7145. We continue to expect support to hold on moves approaching 0.7050 while now any upward push will likely meet resistance at 72 US cents.

Key Movers

The New Zealand dollar yesterday traded in a tight trading range against the U.S dollar after better-than-expected United States jobs figures on Friday lifted the Kiwi from its last week’s lows. The NZD/USD pair traded yesterday between 0.6766 and 0.6725.

On the data front today there are no scheduled releases. However, there could still be more volatility ahead, particularly if US stock markets continue their recent wild swings.

From a technical perspective, the NZD/USD pair is currently trading at 0.6753. We continue to expect support to hold on moves approaching 0.6720 while now any upward push will likely meet resistance around 0.6770. The New Zealand dollar overnight fell against the Australian dollar 1.0579, but rose against the British pence to 0.5287, and 0.5884 against the euro.

The pound benefited from broad based USD weakness on Monday with GBP/USD extending gains up to 1.2786 to touch its highest level in over a week. At present investors seem to be casting aside Brexit uncertainty as moves back into riskier assets are being observed following last week’s risk off moves.

This is somewhat surprising given the impending Brexit deal vote in the UK parliament which is scheduled for next week. Prime minister May has already stated that a rejection to her deal would leave the UK in ‘uncharted territory’ however, she is unlikely to receive the approval required from the houses. It is worth noting we could be in for some volatility in the nearer term, as Tuesday sees the parliament begin discussions about the matter in the build up to the vote. Any indication that a deal would be accepted will be viewed favorably in terms of price action for the pound.

Technical levels to consider heading into today’s trading are 1.2695 on the downside and 1.2815 on the topside.

The US Dollar fell through trade on Monday as investors continue to adjust expectations for future growth amid increasing speculation the US economy is running out of steam. The Greenback has suffered a marked correction over the last month as markets anticipate the pace of Fed rate hikes will slow throughout 2019. Recent commentary from Fed officials suggests future monetary policy adjustments will be largely dependent on evolving economic conditions, a move away from preset interest rate hikes and a clear signal the FOMC is wary of extending rates to quickly and in turn stifling future growth.

The Dollar index was down near half a percent in afternoon trade touching 95.73 and appears poised to break two and a half month lows at 95.68, while the Euro extended moves beyond 1.14 to touch 1.1475 and the JPY threatened to break below 1.08.

Attentions now turn to the ongoing domestic political turmoil and border security dispute while, US and China official meet in Beijing this week, the first meeting since President Trump and Premier XI agreed a 90-day trade war truce. Analysts are optimistic the talks will yield a positive return, bolstering emerging and commodity led markets and perhaps easing the strain on global growth concerns.

The EUR steadily rose against the USD during yesterday’s trading session and is flirting with a daily high of 1.1479, almost matching it’s current past week high of 1.1485. This rise is bolstered by the positive releases regarding retail sales, as the figure from the release came back at 0.6%, higher than the expected forecast of 0.2%.

The next expected major release for the EUR will come on Thursday just before midnight at 11:30pm. This will be minutes of the December meeting of the European Central Bank. It is a detailed record of the ECB Governing Board’s recent meeting, that may possibly provide some direction as to where the interest rate will be set at.

The EUR opened against the USD this morning at 1.1476.

The Canadian Dollar advanced further overnight as PMI releases and Oil in North America conspired to support the Loonie. Opening this morning at 1.3296, the Canadian Dollar continues its good form from last week to reach a near 4-week high.

The Canadian Dollars good fortune began in the headlines with equity markets in particular, calmed by news US officials meet their Chinese counterparts this week for further trade negotiation. Risk sentiment turned on the news adding support for the Loonie. In other markets, Oil extended its rally from 18-month lows hit in December with support from OPEC production cuts. Crude Oil prices were up 1.3%, also assisting Canada’s Dollar valuation against its counterparts. The latest news however also forced the Loonie higher with PMI figures in the United States posting a disappointing result. Conversely, Canada’s PMI release was surprisingly positive, further exacerbating the Canadian Dollars momentum.

Moving into Tuesday, the Canadian Dollar is set to enjoy the release of their Trade Balance to guide direction ahead of the Bank Of Canada’s monetary policy statement on Thursday.

Expected Ranges

  • AUD/NZD: 1.0425 - 1.0625 ▲
  • GBP/AUD: 1.7780 - 1.8150 ▲
  • AUD/USD: 0.7020 - 0.7180 ▲
  • AUD/EUR: 0.6180 - 0.6280 ▼
  • AUD/CAD: 0.9380 - 0.9580 ▼