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Markets Driven by Central Bank Heads

Thursday 29 June, 2017

Daily Currency Update

Key Movers

Global optimism has again been spurred overnight following a raft of confidence boosting comments from a handful of the world’s largest central banks. Driving the Australian dollar to its highest level since March when valued against its US Counterpart, its strength has since been well maintained as it currently oscillates around the 76.30 US cents mark. Whilst the domestic session today isn’t likely to offer many surprises, underlying shifts in the worlds reserve currency remain front and centre as investors await the release of this evenings US GDP print to see if realised economic growth sits alongside the optimistic projections being touted by policy makers.
The New Zealand Dollar is slightly higher than the Greenback up 0.4% on the day, having posted a daily high at 0.7313 and low at 0.7253. The Kiwi dollar has been on a bullish run since the middle of May despite the resurgence of the greenback. On the domestic front, investors will be watching for ANZ Bank New Zealand's business confidence survey today and building consents data tomorrow. The NZD/USD pair is currently trading at 0.7306. We now expect any upward push will likely meet resistance around 0.7320. The Kiwi is also weaker against both the Aussie 0.9591 (1.0426) and the British Pound 0.5649 (1.7700).
In a week with little heavy hitting economic releases the major currencies were driven by the Central Banks. Led by central bankers in the EU, UK and Canada, the hawkish tone across these regions signals the potential wind back of accommodative monetary support. Proving to be a catalyst in overnight markets, momentum really kicked off during the European trading session with ECB president Draghi delivering a speech with a mostly positive tone sending the Euro to a fresh 2017 high against the Greenback. Opening this morning at 1.1376, the markets continue to be bullish on the Euro despite the ECB suggesting markets misjudged Draghi’s speech. Across the channel, the Bank of England’s Governor Carney released a speech which markets have interpreted as primarily hawkish, back flipping on last weeks’ missive and sending the GBP higher. The positive comments coming from Europe led to the American dollar and Japanese Yen being the worst performers during the overnight session. The US Dollar Index (DXY), a measure of the dollar against a basket of currencies fell 0.39% and closed at 96.021. In JPY news, the USD/JPY currently trades at 112.28, having oscillated between a daily high of 112.34 and a low of 112.24. Markets now turn to economic data releases in the US to close out the week with GDP and Unemployment Claims being released during the American session tonight.

Expected Ranges

  • AUD/USD: 0.7575 - 0.7700 ▲
  • NZD/USD: 0.7250 - 0.7350 ▲
  • GBP/AUD: 1.6800 - 1.7000 ▲