Daily Currency Update

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Kiwi struggles to break outside ranges

By OFX

The New Zealand dollar is up roughly 0.1 percent this morning when valued against the Greenback with the positive reports on US-China trade negotiations providing some support. The United States and China appeared to be close to a deal that would roll back U.S. tariffs on at least $200 billion worth of Chinese imports.

On the release front today we will see ANZ Commodity Price Index and another Global Dairy Trade auction which takes place tonight, with markets expecting a further rise in prices.

From a technical perspective, the NZD/USD pair is currently trading at 0.6823. We continue to expect support to hold on moves approaching 0.6790 while now any upward push will likely meet resistance around 0.6830.

The Australian Dollar moved higher from open on Monday as investors grasp onto updates between United States and China in their ongoing trade war negotiations. Hopes of a trade deal lingered as the Aussie moved to morning highs of 0.7109 as it was suggested in the media that a formal agreement could reached at a summit on March 27th.

Overall gains were seen on the day of 0.2%, pulling back from session highs as the Australian Dollar continues to trade in familiar territory. ANZ Job ads data saw a fourth monthly decline as the labour market continues to decline despite being a pillar of strength in the economy over the past twelve months.

Strong Building Approvals picked up risk appetite on the AUD/USD cross in the afternoon as an increase in the January figure of 2.5% saw the Aussie regain momentum into the 0.71 handle. Not able to sustain any rallies in overnight markets, the Australian dollar opens this morning at 0.7090.

The Reserve Bank of Australia will release their March interest rate decision this afternoon where it is expected that interest rates will remain on hold at benchmark lows of 1.5%. Market economists are scaling back probabilities of any future interest rate rises as the RBA continues to set a neutral stance.

We expect support to hold on moves approaching 0.7000 while any upward push will likely meet resistance around 0.7150.

The Great British Pound fell against the United States Dollar yesterday to open at 1.13694 this morning. The continuous Brexit uncertainty situation still remains the biggest factor for the Pound, and speculation is that it will bounce back after it is resolved. For now, we can expect more volatility until the current deadline of March 29.

Looking ahead, Markit economics will be releasing their Purchasing Managers Index (PMI) data later this evening. Showing the level of the diffusion index based on surveying purchasing managers in the services industry, it is a leading indicator of economic health as purchasing managers hold a current and relevant insights into the company’s view of the economy.

The US dollar advanced against a collection of major counterparts Monday, sustaining the recent upturn and rallying for a fourth consecutive trading session. The dollar found support in upbeat US-China trade rhetoric while an uptick in bond yields helps fuel demand for the world’s base currency. The Gap between US and Germany bond yields has widened throughout the first two months of the year, ensuring the USD remains an attractive yield play, while weighing on the Euro.

Trade remains a key driver for medium- and longer-term USD fortunes, with the drag on global growth starting to permeate the US domestic economy. China and the US appear to be on the brink of a deal that would roll back tariffs on a large portion of Chinese imports, reducing the friction that has acted as a drag on growth through the last 12 months. The dollar index pushed nearer 97 touching 96.68 with bullish bets increasing to their highest level in four weeks.

Attentions now turn to key services data for direction through Tuesday, while Fed commentary and Non-Farm Payroll numbers guide a broader weekly bearing.

The Euro opened weaker this morning against the Greenback, falling 0.33 percent at 1.1331, as traders’ bets that China and the United States are moving closer to a trade deal that would end sparring between the world’s two biggest economies. On the EU data release yesterday the Sentix Investor Confidence was better than expected improving in March to -2.2 from the previous -3.7, while producer prices rose in February by 0.4% MoM and by 3.0% YoY, also beating the market's forecasts.

On the release front today we will see European Retail Sales for the month of February, seen growing by 0.8% MoM and 1.2% YoY.

From a technical perspective, the EUR/USD pair is currently trading at 1.1295. We continue to expect support to hold on moves approaching 1.1300 while now any upward push will likely meet resistance around 1.1340.

The Canadian Dollar enjoyed a slow start to the week with little news on the domestic calendar. Opening this morning at 1.3306, the Loonie managed to steady the ship after slipping almost 1% on Friday.

Friday’s precipitous fall was spurred on by the soft GDP report that saw the economy contract for the second straight month. The contraction meant the economy expanded by only 1.8% for 2018, against the expected 2%. The Bank of Canada has said they expect the slowdown to be temporary but nevertheless, the market has shown some concerns.

Tuesday continues the slow start to the week for the Loonie with little to drive direction domestically.