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US dollar loses momentum on falling inflation

BY JOEL HOLMES

The Australian Dollar is higher this morning against the Greenback. The Aussie was headed toward the fourth gain in a row, but just closed under 0.7600. The AUD/USD pair is currently trading at 0.7590.  We now expect support to hold on moves approaching 0.7565 while any upward push will likely meet resistance around 0.7605. Attentions today turn to the release of the Minutes of the monetary policy meetings of the Reserve Bank Board from a fortnight ago. Looking ahead this week, and its fairly quiet on the data front, New Motor Vehicle Sales for the month of March out on Wednesday, and NAB Quarterly Business Confidence survey released on Thursday. 

The New Zealand dollar opens this morning little changed when valued against its US Counterpart. Having traded to an overnight high of 0.7035 the past 24 hours has been a largely uninspiring trading window for the Kiwi dollar. The NZD/USD pair is currently trading at 0.7010. We now expect support to hold on moves approaching 0.6965 while any upward push will likely meet resistance around 0.7012. With no local economic data scheduled for today, attentions turn to tonight's Global Dairy Trade auction, amid expectations whole milk powder prices could rise 5 percent, based on NZX dairy futures. Looking ahead this week all eyes will be on Thursday’s CPI data release for the previous quarter. 

The Great British Pound moved towards levels of 1.2600 against the U.S Dollar in a market of low volumes having observing the Easter holiday period. The GBP has been one of the outperformers as geopolitical tensions rise between the USA and North Korea and the risk of the Kim Jong-Un led nation declaring a nuclear war. GBP/USD rose to a three-week high of 1.2596 meanwhile GBP/JPY is buying close to 137.00.  A very quiet week regarding UK macroeconomic data until this Friday with Retail Sales due. 

Markets were subdued with low liquidity as expected over the observed Easter holiday. A weak inflation reading of -0.3% in the United States on Good Friday saw the US Dollar index end the week lower at 100.40. Furthermore, a softer retail figure in the United States extended declines on the USD/JPY pair and below 109.00 for the first time this year. A failed missile attempt in North Korea has halted a major risk off move on currency markets, but remains on edge as US Vice President Mike Pence noted the United States will deal with North Korea should China not. EUR/USD pushed higher on broader USD weakness, trading off support at 1.06 to a high of 1.0670 in overnight trading.