Aussie holds at two-month highs
Daily Currency Update
The Australian Dollar is holding itself around the two-month high levels despite weaker-than expected economic figures. Retail sales came in below the consensus at 0.1% where there was an expectation of a 0.2% rise for the month of May thinking that the economy would receive a boost from the election campaign. Sadly, the numbers add to a disappointing weak quarter for household consumption. In more detail, discretionary spending was a shade better than the April numbers, Household goods and café spending also up but the clothing retailers, department stores and food all fell. AUD/USD showed resilience and jumped 10 points touching a high of 0.7047, a level not witnessed since early May.Looking ahead, the domestic docket sees the release of the AiG Construction Index which will be looked upon for fresh clues on the health of the Australian construction industry. Also, tonight investors will be focused on US data which will see the release of government nonfarm payrolls report for June along with wage growth and unemployment figures. A weak payroll outcome would certainly bolster the case for a rate cut from the Federal Reserve, particularly given the data follows a poor result in May.
Adopting a technical viewpoint, Aussie is currently trading at 0.7022, we see initial AUD/USD support at 0.7000 (psychological level) before 0.6955 on the downside. On the topside, first lines of resistance are seen at a level of 0.7050 followed by 0.7070.
Key Movers
US markets were closed yesterday observing July 4th U.S independence day so markets were fairly contained and there’s not a great deal to report on overnight market news. EUR/USD moved sideways between 1.1270 and 1.1295 and we saw Retail Sales for the Eurozone fall 0.3% for the month of May, this was the second consecutive fall, and highlights ongoing weakness in the euro zone economy. ECB Governing Council member and Finnish central bank governor Olli Rehn has said that “we should no longer see the recent slowdown in growth as a brief temporary dip in the economy, as a ‘soft patch’”. Adding “We are experiencing a longer phase of weaker growth”. He called on action by the ECB saying, “If we really want to live up to our mandate, further monetary stimulus is now needed until there is improvement in economic and inflation prospects”.GBP/USD relatively flat trading between 1.2568 and 1.2591. Reports say if Boris Johnson does become the next Prime Minister and leads the UK out of the EU with a no-deal the Sterling will likely fall to 2 year lows against the Greenback.
Expected r
Expected Ranges
- AUD/USD: 0.6960 - 0.7090 ▲
- GBP/AUD: 1.7800 - 1.8100 ▼
- AUD/NZD: 1.0440 - 1.0560 ▲
- AUD/EUR: 0.6190 - 0.6300 ▲
- AUD/CAD: 0.9140 - 0.9250 ▲