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Aussie tumbles on RBA rate cut

MATT RICHARDSON

The Australian Dollar moved within a 20-pip range intraday yesterday as financial markets were closed observing the ANZAC public holiday. Once European markets opened the Australian dollar was dragged lower despite more risk appetite as geopolitical risks faded and higher commodity prices. AUD/USD fell from a high of 0.7572 to a low of 0.7520, the pair has since regained some losses at sits at 0.7535 at the time of writing. Locally sees the release of Australian CPI data which analysts consider one of the most important economic indicators. The forecast is expected to increase by 0.6% for Q1 2017. 

The New Zealand dollar broke 0.70 against the American Dollar as commodities currencies saw downside movements on thin liquidity, in the biggest daily loss since March. The Kiwi was also hampered by the Canadian Dollar, as tariffs were announced by the United States on soft lumber imports. As New Zealand observed the annual ANZAC public holiday, Kiwi drifted to an intraday low of 0.6985. Markets saw an overnight low of 0.6940 due to a risk on environment, and flows back into the USD. Local data set sees the release of Visitor Arrivals for April and Credit Card spending for the year as the New Zealand dollar opens at 0.6950 this morning.

The Great British Pound opened this morning little changed when valued against its US Counterpart with the Sterling reaching an overnight high of 1.2845, up 0.33% on the day. With little to no macroeconomic data out of the UK today all eyes will be on the election polls, and the anticipated size of the Conservative majority in the upcoming UK elections. In the last week, the Pound Sterling has rallied over 300 points against the Greenback after Prime Minister Theresa May called of a snap election. The GBP/USD is currently trading at 1.2833. We now expect support to hold on moves approaching 1.2770 while any upward push will likely meet resistance around 1.2920. 

The U.S dollar enjoyed mixed fortunes through trade on Tuesday rallying against the Yen, Mexican Peso and Canadian Dollar while touching near six month lows against the Euro. The Greenback surged against the Canadian Dollar and Mexican Peso after the Trump administration announced a Tariff on the import of Lumber from Canada. The announcement is seen as a marker for future trade discussions and highlights the approach of the Trump government toward NAFTA and the future of the 20-year-old trade agreement. The Euro continued higher moving through 1.0950 as investors’ confidence in a centrist victory in next month’s French election were bolstered as Emmanuel Macron’s victory in the first round of voting was confirmed. The result eliminates a large portion of uncertainty surrounding the future of the Euro and European Union and prompts many market participants to expect a hawkish shift in sentiment from the ECB and a reduction in monetary stimulus. Attentions now turn to the Trump administration and the release of key Tax reforms Wednesday ahead of an ECB meeting and monetary policy comment Thursday as symbols for short to medium term direction.