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US Dollar gains on stronger GDP print

By JOEL HOLMES

The Australian Dollar closed last week against the Greenback at similar levels where the pair had begun the trading week, the local unit opened at 0.7459 and moved within a 1 US cent range for the week closing at 0.7439 on Friday. Upbeat US data kept a lid on the Aussie on Friday, with preliminary US GDP rising even higher than expected implies more momentum in activity going into the second quarter and US Durable goods falling less than market expectations. First release of local economic data begins tomorrow with Building Approvals which will be watched closely following an unexpectedly large drop in March when they plunged by 13.4%. With Friday’s sell-off, on the technical front, the pair sees its first resistance level at 0.7500 following by 0.7560. On the support side, we see levels at 0.7420 followed by 0.7330.

The Great British Pound moved lower into the weekly close on Friday suffering heavy selling pressure in what was otherwise a lacklustre finish to the trading week. The Pound lost some 170 points as pre-election polls showed the conservatives gap over labour has narrowed raising renewed concerns surrounding the political stability of the UK and wider Europe. A weakened Conservative Government would likely prolong the Brexit process and weaken Prime Minster May’s position of negotiation. Sterling moved through 1.29 and 1.2850 touching intraday lows at 1.2789 as a slump in consumer confidence numbers extended the downward move before support kicked in and the GBP crept back above 1.28. With little headline data on hand this week attentions and direction will likely be driven by domestic political events as the June 8 election draws ever closer.  

The New Zealand Dollar opens this morning weaker when values against its US counterpart. On Friday, the USD moved higher on the back of US first-quarter gross domestic product beat expectations with a revised annual 1.2 per cent in the first quarter, up from an initial forecast of 0.9 per cent. Today there is a bank holiday in the US, and with no economic local news scheduled, traders will likely look for offshore events to drive the direction to the kiwi. The NZD/USD pair is currently trading at 0.7054. We now expect support to hold on moves approaching 0.7015 while any upward push will likely meet resistance around 0.7097.

The US Dollar saw gains on Friday evening as GDP figures were revised up to 1.2% for the first quarter of 2017. Despite having being the weakest reading since Q1 2016, the dollar Index rose 0.2% on a flat end to the week before the memorial day long weekend. Both US equities and treasury yields were steady, with Fed fund futures yields pricing a June rate hike at 85%. Crude oil prices recovered by 1.8% after its previous 5%-day decline. EUR/USD closed the week lower at 1.1170 after hitting a yearly high during the week of 1.1267. Japanese core inflation rose 0.3% on an annual basis and for the fourth consecutive month, driving the USD/JPY to a three day low of 110.90. Losses were paired during the North American session following a positive lead from American data to 111.20. Expect movements to be light on today as holidays are observed in a number of major markets today.