Australian dollar consolidates above US74¢ mark
Tuesday 10 July, 2018
Daily Currency UpdateThe Australian Dollar is stronger this morning when valued against the US Dollar. The AUD/USD pair reached an overnight high of 0.7483, its highest since June 14th, on the back of a broad US dollar weakness.
On the local data front yesterday there were no macroeconomic releases in Australia. Today at 11:30am AEST we will see the release of NAB's business confidence for the month of June with expectations of rising business conditions (8 from the previous 6). Domestic business conditions hit record highs earlier this year, although Australian business conditions for May showed sharp declines (falling six points to +15) in NSW and Victoria.
From a technical perspective, the AUD/USD pair is currently trading at 0.7460. We continue to expect to hold on moves approaching 0.7400 while now any upward push will likely meet resistance around 0.7490.
Key MoversThe New Zealand Dollar has managed to hold above 68c opening this morning at 0.6837 when valued against its US counterpart. With no scheduled data out the Kiwi was boosted by improved risk sentiment and stronger global commodities. The pair traded within a very tight range yesterday against the Greenback moving between 0.6828 and 0.6859. With Gold prices trading higher along with Silver, Copper and Aluminium all have assisted commodity-sensitive currencies such as the Kiwi and Aussie. NZD/AUD is weaker buying 0.9157 however stronger against the Japanese Yen currently changing hands at 75.80.
The next data of significance for the pair will be the electronic card retail sales from New Zealand scheduled to be released in the early Asian session today.
On the technical front, the pair could face the first resistance at 0.6860 (daily high) followed by 0.6910. On the downside, supports are located 0.6780 and 0.6735
The Great British Pound enjoyed mixed fortunes through trade on Tuesday as USD softness coupled with Brexit doubts creates uncertainty in minds of investors. Sterling opened lower Monday after Brexit Secretary David Davis weekend resignation sparked an immediate sell off and dip back below 1.33. Touching early lows at 1.3280 Sterling then drove higher, backed by a weaker USD and improved global appetite to risk. Rallying to touch intraday highs at 1.3362 the Pound then marked its biggest single day drop in nearly four weeks as Foreign Secretary Boris Johnson lodged his own resignation leaving Prime Minister May’s Brexit plan in tatters. Just days after a cabinet meeting in which a cohesive unity had been found the shock resignations leave the governments exit strategy in disarray and further highlight the uncertainty that is Britain’s divorce from Europe. Plunging 1.3% to touch session lows at 1.32 the Pound opens this morning marginally higher buying 1.3251.
Attentions now turn to key macroeconomic indicators as possible markers for short term upside. May GDP and manufacturing data headline a largely crowded British docket with upside prints supporting calls for an August rate hike. Strong reads could help underpin broader Brexit weakness and help keep the pound above 1.32 with upside gains toward 1.3380/1.34 open.
The US Dollar continued to underperform over the last 24 hours with an improvement in appetite for risk. With news light on in the United States, the only release worth of mention was an increase in consumer credit, jumping to its highest level in six months for the month of May.
The US Dollar index barely moved and was up 0.12% for the day, probable cause due to the lack of trade war news or retaliation from both sides with the DXY remaining above the 94.00 handle.
Equities and oil prices both rose, along with treasury yields seeing nearly three basis points higher as 10-y bond auctions are on the horizon this week with the Treasury Department due to sell $70 billion worth of bonds on Thursday morning.
In one of the few movements higher for the US Dollar we saw it rally against the Japanese Yen from its sideways movements into 110.50 to an overnight high of 110.90 as market participants prepares for the latest CPI print released in the United States on Thursday.
The Euro ended the session almost flat versus the USD, around 1.1750. The common currency continued to strengthen during the start of the European session, taking cues from a positive close in Asia and reaching 1.1790 on ECB’s Nowotny comments about fear of deflation being over.
Unfortunately for the Euro, it was not only the important 1.18 level that acted as a cap for the EURUSD, but also ECB president Draghi, who reiterated prudence on any future policy move and sees interest rates on hold at least through summer 2019.
The Euro reversed gains on the comments and its now trading back below 1.1760
The CAD wasn’t able to hold below the 1.31 level reached during the Asian and then European session, on a broad risk-on move that saw the USD initially loosing against all major currencies. The USDCAD dropped to its lowest level in almost a month, 1.3067, also supported by higher Oil prices and probabilities of a rate hike in Tomorrow’s meeting, standing now around 85%.
Unfortunately, the CAD ended the session around 0.18% weaker at 1.3107 after reversing the initial strength on the back of trade tariff concerns and how is that going to impact NAFTA negotiations.
The next move on the USDCAD will probably come from the Housing data tonight and tomorrow BOC rate decision with short-term support and resistance standing at 1.3070 and 1.3150 respectively.
- AUD/NZD: 1.0850 - 1.0980 ▲
- GBP/AUD: 1.7580 - 1.7930 ▼
- AUD/USD: 0.7380 - 0.7480 ▲
- AUD/EUR: 0.6310 - 0.6380 ▲
- AUD/CAD: 0.9710 - 0.9830 ▲