Daily & Weekly Market News

The Australian Dollar recovered significantly in overnight trading as the much-anticipated tariffs between the United States and China were announced. The versions that were ultimately announced came in slightly diminished from the earlier rhetoric which saw markets gain ground on the Greenback. Opening this morning at 0.7223, the Aussie remains relatively well supported after equity and commodity markets also rallied.

The catalyst of the shift in sentiment was Trumps announcement of $200bn worth of Tariffs on Chinese imports. Initially, Trump announced he would taper down the magnitude of the Tariffs to 10% which will later rise to 25% at the start of next year. China responded in kind by announcing Tariffs on $60bn worth of US imports at 5% and 10% depending on the good. The Aussie initially knee-jerked its way down to 0.7145 before starting its gradual recovery today’s open.

The RBA otherwise added little to the daily narrative with only a passing mention of trade tensions posing a “material risk” to the economy a new addition.

Moving into the middle of the week, the Aussie looks to off-shore forces for direction with a quiet economic calendar to contend with. The risk-on sentiment looks set to continue with the Aussie amongst the best performers amongst its peers.

The New Zealand Dollar is stronger this morning when valued against the U.S. Dollar as China offers no immediate trade retaliation. The Kiwi traded at a high of 0.6607 yesterday as markets took new US tariffs on Chinese imports. Domestically the kiwi got an early lift after Prime Minister Jacinda Ardern mistakenly said she was "pretty pleased" with gross domestic product growth having received a "hint" ahead of Thursday's official release of the second-quarter economic data.

On the data front today Global Dairy Trade (GDT) which fell 0.7% in the previous auction, declined 1.3% today. We also saw the release of Westpac Consumer Sentiment survey. Confidence among New Zealand households has seen a significant drop. The Westpac-McDermott Miller Consumer Confidence Index fell by 5.1 points to 103.5 in the September quarter, its lowest level in six years.

From a technical perspective, the NZD/USD pair is currently trading at 0.6593. We continue to expect support to hold on moves approaching 0.6540 while now any upward push will likely meet resistance around 0.6615.

The Great British pound strengthened throughout the day as the Greenback softened across the board. The Cable, bounced from its long-term resistance at 1.3170 throughout the day but ultimately failed to break the level. Opening this morning at 1.3169, the Pound looks to its inflation data release on Wednesday to set the scene.

The Sterling found a lot of its support from off-shore forces in overnight trading with the tariffs between US and China coming in a lot softer than the worst-case scenario widely anticipated. The market saw the news as relatively positive considering it had priced in a 25% tariff and China’s response was not as heavy as first thought. The Pound found itself riding the softening Greenback throughout most of the day with little domestic data and Brexit headlines to contend with.

Moving into Wednesday, the Pound turns to a busy day on the economic calendar with annual CPI due for release. Following closely on its heels is the PPI and RPI to also digest.

Yesterday as expected the Trump administration announced that a 10% tariff of $200bn worth of Chinese goods will be levied effective September 24th and on the back of this the U.S Dollar which measures the greenback against a trade-weighted basket of six major currencies, rose by to 94.73 from a low of 94.32. The level of the tariff will be raised to 25% beginning next year. The statement added that should China retaliate; the US will consider placing tariffs on an additional $267bn of Chinese imports. China has said it will impose new tariffs on U.S. goods worth $60 billion on Sept. 24, but levies would be instituted at lower rates than had been expected, according to a Reuters report.

Meanwhile on the data front, we saw US NAHB Index steady for the month of September suggesting that homebuilder sentiment might be firming after having dropped in 2018 from its expansionary high in late 2017. The top-line index has remained stable at 67 in the month, a level in line with further rises in homebuilding activity.

Looking ahead the U.S. is to release reports on building permits and housing starts.

The Euro is slightly weaker than the Greenback on the back of the latest trade war developments. The Greenback lost ground against most major rivals but those considered safe-havens. US President Donald Trump announcing yesterday that tariffs on Chinese goods worth $200B will come into effect next September 24. The EUR/USD pair hit a 24-hour high of 1.1723 before settling again below the 1.1700 figure.

On the data front there are no scheduled releases today.

From a technical perspective, the EUR/USD pair is currently trading at 1.1678. We continue to expect support to hold on moves approaching 1.1660 while now any upward push will likely meet resistance around 1.1730.

A strong overnight session for the Loonie saw the domestic unit strengthen to a 3-week high against the green back as oil prices firmed and positive manufacturing data was embraced by markets. The USD/CAD touched lows of 1.2972, that CAD’s strongest level since August 30.

Oil prices were boosted by indications that OPEC would not be looking to raise output to address shrinking supply from Iran with Saudi Arabia also signaling they are comfortable with current levels. The domestic data release saw Canadian factory sales grow 0.9% in July, buoyed by higher sales in the transportation sector and comfortably surpassing expectations of a 0.6% increase. The strong data is a positive leading indicator for Q3 GDP and serves to reinforce that the BOC is positioned to raise benchmark interest rates in October providing NAFTA talks don’t disintegrate.

Looking forward, traders continue to look to Friday’s busy data schedule with Canadian inflation numbers for August and July retail sales both due out. From a technical perspective, USD/CAD is now resting key supports at 1.2970 with a break lower likely to open the door for a fall to levels near to 1.2950 whilst on the flipside topside resistance are now seen at 1.3010.