Home Daily Commentaries Battered Aussie looks to the RBA for direction.

Battered Aussie looks to the RBA for direction.

Daily Currency Update

The Australian Dollar failed to hold above the 0.74 level to be whittled away over the course of the day. Changing hands at 0.7336 this morning, the Aussie looks to have succumbed to the dire global trade outlook spurred on by President Trump.





Again the major impetus for the fall was market sentiment turning sour as the global trade outlook continues to look poor. President Trump looks likely to impose further tariffs on China and Europe with both entities looking to retaliate in kind. Closer to home, the Australian Dollar was also discouraged from pushing higher with softer than expected Chinese and Australia data releases. The Chinese Caixin Manufacturing PMI fell slightly as did the Australia AIG Performance of Manufacturing index. While they were only marginally softer than expected, the result did not help market sentiment. Conversely, US ISM Manufacturing PMI posted a positive reading against its expected result. Ultimately, the mix of poorer results and trade tensions has led to a significant fall in the Aussie to start the first quarter of the New Year.



Tuesday is shaping up to be a similar day to Monday with several PMI results slated for release in Europe and the UK. The RBA are also scheduled to release their RBA rate statement which is widely expected to be kept on hold for a 23rd consecutive month.

Key Movers

The New Zealand dollar sell off continued Monday as risk appetite again drove broader direction and saw markets shift back toward haven assets. Despite a brief and shallow relief rally on Friday the NZD was again the victim of escalating trade tensions and risk flows as investors keep one eye on a July six tariff deadline. Washington is expected to impose $34 billion in tariffs on Chinese exports this Friday and when coupled with a softening in broader manufacturing macro indicators there are real fears escalating trade hostilities will have a broader dampening effect on global growth.





Moving through 0.6725 the NZD touched intraday lows at 0.6690 and opens this morning buying 0.6709 U.S cents. Attentions this morning shift to domestic business confidence date for short term direction with wider ranges driven by the ongoing eb and flow of risk appetite. Watching resistance now on moves approaching 0.68 we imagine the NZD will remain under pressure as long as the current risk environment and US yield play remain intact.


The Great British Pound gains on Friday evening were quickly erased on open yesterday as investors were keen to take profits causing a sharp sell off. Opening at the 1.32 handle against the US Dollar, Cable saw downside movement and an overnight low of 1.3095.





An increase in UK manufacturing PMI to 54.4 for the month of June saw a small rally of twenty five pips at the start of the UK session. It was not enough to consolidate any further rallies higher as the the greenback resumed its overall strength against G10 currencies.



Sterling saw limited upside into this morning’s open as the pair looks to test resistance lines at 1.3140. Today we see the release of the UK Construction PMI and FPC Meeting minutes as GBP/USD opens at 1.3135.


The US dollar advanced overnight against most of its rival counterparts on the back of continued trade war fears and stronger-than-expected US data. On the data front yesterday US Markit Manufacturing PMI for June was upwardly revised to 55.4 from 54.6, while the official ISM figure printed a whopping 60.2 vs. the 58.4 expected. US equities also erased the previous session losses, surging higher after President Donald Trump said the US would be meeting with Europe soon to discuss trade. The S&P500 finished the session higher 2,726.71 +8.34 (+0.31%).



Looking ahead today in the US and we will see the release of ISM Manufacturing PMI, Construction Spending, and ISM NY Business Conditions Index all for the month of June. In the EU we will see the release of the Producer Price Index (PPI) and Retail Sales figures for May.



From a technical perspective, the US Dollar is currently stronger against the Japanese Yen 110.87 but trading slightly lower against the Pound Sterling 1.3137. After falling to an overnight low of 1.15998 the Euro settled around the 1.1600 level. EUR/USD is currently trading at 1.1636. We continue to expect the EUR/USD pair to hold on key support moves approaching 1.1590 while now any upward push will likely meet resistance around 1.1660.


The Euro has been trading on a very volatile fashion lately. The 1.16 support level on the EURUSD was tested yesterday as concerns over auto tariffs and Merkel’s coalition fragility were exposed.

The common currency was then able to recover from the lows as CSU Seehofer agreed not to resign and the CSU/CDU apparently reached an agreement on the migration debate. Still the Euro closed the day weaker versus the dollar at 1.1639.

Looking forward, US tariffs on China for July 6, Brexit negotiations and further potential tensions in the EU political equilibrium will continue to influence the Euro. For now we are still trading on the 1.16/1.17 tight range.


The loonie ended up the session around 0.20% weaker versus the USD at 1.3189.
The USDCAD broke above the important 1.32 level in the early hours of the US session as stronger than expected US PMI data helped the pair reach a new session high at 1.3225.

The CAD recovered a bit thanks to a positive reversal in oil prices that brought some downward pressure on the USDCAD which saw the cross breaking back below 1.32.

From a technical perspective, 1.3225 (Yesterday’s high) should act as first resistance for the USDCAD ahead of 1.3265 (June 29th high). Next support is sitting first at 1.3150 and then 1.3125 (Jun 29th low)

Expected Ranges

  • AUD/NZD: 1.0850 - 1.1050 ▲
  • GBP/AUD: 1.7830 - 1.8030 ▲
  • AUD/USD: 0.7230 - 0.7430 ▼
  • AUD/EUR: 0.6280 - 0.6380 ▼
  • AUD/CAD: 0.9610 - 0.9750 ▼