Aussie holds on to US Dollar gains
Monday 11 September, 2017
Daily Currency Update
Key MoversThe Australian dollar surged through trade on Friday touching fresh two year highs as the U.S dollar met renewed selling pressures. The world’s base currency tumbled as investors again revised expectations for interest rates while increasing tensions with North Korea and the ravaging effects of hurricane Irma weighed heavily on investors demand for risk. The Aussie dollar moved through key technical resistance at 0.8030/40 and touched intraday highs at 0.8121 before profit taking saw a correction into the close and we open this morning buying 0.8050 U.S Cents. Attentions today will likely remain with wider risk trends as the domestic macroeconomic docket offers little to spark direction with focus turning to key U.S inflation and detail sales data due Thursday and Friday.
The New Zealand peaked on Friday for a weekly high of 0.7335 at the close of the domestic session after an intraday rally of 1.5%. The morning saw a lift in manufacturing sales for the quarter spurred on by an increase in the volume of meat and dairy products. The Kiwi fell from its monthly high in offshore trading as tensions continue between the United States and North Korea. Safe haven plays saw the NZD/USD fall through the 0.73 handle and close the week at 0.7260. With a lack of domestic data on the horizon, investors focus on the upcoming NZ general election on September 23rd as Labour currently holds a small lead in current polls. The New Zealand dollar opens this morning at 72.45 US cents.
The Great British Pound gained a healthy 2.5% against the Greenback last week despite a flurry of macroeconomic data released on Friday painting a mixed picture of the UK economy. UK manufacturing output grew at the fastest pace this year with a rise of 0.5% while Industrial Production increased by 0.2% - in line with expectations. However, Construction Output suffered a bigger fall of 0.9% which was larger than economists had forecasted, the fall was mainly driven by a £95M decline in private house building over the month. Meanwhile the UK Trade deficit narrowed to £11,58 billion in July, beating expectations for it to widen. The GBP/USD rate touched a high of 1.3224 in the European session and GBP/EUR near three-week highs of 1.0976. Looking ahead, a quiet day on the release front until tomorrow with CPI and PPI due for release. On the technical front, support lies at 1.3115 followed by 1.3000 with the pair seeing resistance at 1.3270.
The Greenback continued to succumb to broader weakness on Friday as investors responded to the amended expectations for the Federal Reserve's rate hike path with the probability of a Fed rate hike in December now diminished. The EUR/USD pair finished the week on a yearly high of 1.2092 after the European Central Bank left rates and the QE program unchanged. Fairly quiet day ahead on the macroeconomic calendar with the only scheduled release monthly Italian Industrial Production for August. The EUR/USD pair is currently trading at 1.2014. We now expect support to hold on moves approaching 1.2010 while any upward push will likely meet resistance around 1.2070.
- AUD/USD: 0.8000 - 0.8100 ▲
- NZD/USD: 0.7200 - 0.7300 ▲
- GBP/AUD: 1.6325 - 1.6450 ▲