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U.S. Dollar underperforms after PMI misses expectations

Monday 26 June, 2017

Daily Currency Update

Key Movers

The Australian Dollar steadied through trade on Friday edging higher into the weekly close and consolidating above 0.7550. With minimal macroeconomic data on hand to drive direction the AUD found support in stronger commodity prices, lead by a resurgence in gold, while the USD suffered heavy selling as investors questioned the likelihood of additional Federal Reserve monetary policy action. Despite commentary from FOMC and Fed officials supporting continued tightening of monetary policy conditions, a string of softer macroeconomic data sets, a perceived imbalance in economic growth and the pall of weak inflation weighed heavily on the world’s base currency and investors looked to dump the greenback. The Aussie bounced off intraday lows at 0.7536 to touch session highs at 0.7577 and opens this morning buying 0.7566 U. S cents. With its fortunes heavily tied to US monetary policy expectations attentions now turn to U.S Durable Goods Orders for direction through Monday.  
The New Zealand dollar finished higher against the Greenback in New York trading on Friday. The Kiwi reached a high of 0.7281, up from 0.7267 cents in Asia last week. Quiet day ahead locally with no economic data releases scheduled. Looking at the week ahead tomorrow will see the release of Trade Balance for the month of May. On Thursday, monthly ANZ Business Confidence and finally business confidence on Friday, which will provide an update on how the domestic economy may be faring. The NZD/USD pair is currently trading at 0.7280. We now expect any upward push will likely meet resistance around 0.7320. The kiwi dollar rose to 0.9624 (1.0391) Australian cents from 96.10 (1.0405) cents in New York on Friday.
Markets were relatively flat on Friday as the U.S. Dollar saw small losses against G10 currencies. Both Flash Manufacturing and services PMI numbers slowed for the month of June, although still showing a stage of expansion. The U.S. Dollar index closed 0.25% down for the day after one month highs set earlier in the week. Both equity and treasury markets were unchanged. The Euro was sent higher this week after a number of strong manufacturing PMI readings in France and Germany. Hitting a weekly low of 1.1120 on Tuesday, The EUR/USD cross ended the week higher just below the 1.12 handle with further direction dictated by ECB president Mario Draghi’s speech this evening. USD/JPY was little changed, moving slightly lower to 111.20 and could look to retest weekly lows at 111.00 dependent on Treasury yield movements. And finally FOMC Member James Bullard reiterated that the Fed are watching inflation data closely, dictating any future interest rate rises.

Expected Ranges

  • AUD/USD: 0.7500 - 0.7600 ▼
  • NZD/USD: 0.7200 - 0.7300 ▲
  • GBP/AUD: 1.6750 - 1.7000 ▲