AUD - Australian Dollar

The Australian Dollar was under renewed pressure yesterday despite an impressive employment print during Thursday morning. Opening at the 73 US cent handle, volatility was seen into the lead up to the unemployment print which saw the headline rate improve to 6.8% in August, comfortably beating initial expectations of 7.7%.

The Initial rally was seen in favour for the local currency from 0.7270, reaching an intraday high of 0.7310. Healthy employment gains were also seen, increasing by 110,000 jobs vs a -35,000 consensus, albeit led by part-jobs.

The tide quickly turned though losing all gains during the afternoon play as risk appetite waned. Flows back into the US dollar were seen and equities were also sold off as the ASX 200 closed 1.22% lower.

The Australian dollar recovered overnight and opens this morning at 0.7312. We expect support levels to hold on moves approaching 0.7260, while any upward push will likely meet resistance at 0.7350.

Key Movers

Equities were under pressure again dragging risk-based currencies with it. Tech stocks were the main catalyst for falls as the Nasdaq shed 1.48% overnight and the S&P 500 was down 0.85%. Investors sold on the lack of further QE plan updates by the Federal Reserve in the latest FOMC statement released on Thursday morning.

The US Dollar index was lower overnight (-0.2%) as a number of economic releases in the United States did little to move the needle in currency markets. Unemployment claims came in slightly below expectations as 860,000 American Citizens filed for first time claims and represents a modest shift lower. The Philly Fed Manufacturing Index grew at a slightly higher pace in September despite falling from 17.2 in August to 15 this month. The positive reading suggests that market conditions are slightly improving.

Across the Atlantic, the Bank of England also held their latest Monetary meeting, leaving interest rates at record lows as expected at 0.1%. The Great British Pound fell initially a full cent to 1.2865 as policy makers noted they would consider all options including negative interest rates in the future to combat uncertainty due to COVID-19. Eventual losses were stretched, and cable ended square at 1.2975.

On the docket today is the latest Retail Sales print in the United Kingdom overnight. Preliminary Consumer Sentiment and Inflation expectations are also due for release this evening in the United States.

Expected Ranges

AUD/USD: 0.7260 - 0.7350 ▲

GBP/AUD: 1.7500 - 1.7850 ▼

AUD/NZD: 1.0800 - 1.0880 ▼

AUD/EUR: 0.6140 - 0.6200 ▼

AUD/CAD: 0.9600 - 0.9670 ▼

AUD - Australian Dollar

The overnight session saw the Australian Dollar seesaw against its US counterpart. AUD/USD initially ascended from 0.7320 to 0.7344 before retreating back to 0.7280, well below the key 0.73 handle. With the Kiwi also rising against the greenback, AUD/NZD fell nearly 50 pips from 1.0880 to 1.0833.

Looking to the session ahead, domestic employment data is due out this morning. Despite July’s strong rebound, the unemployment rate is expected to come in higher than 7.5% as the shutdown in Victoria and slowdowns in employment growth in NSW begin to show. Traders will also be keeping an eye on GDP data due out of New Zealand and Eurozone inflation due out tonight for any clues about the state of global growth.

With the Australian Dollar oscillating around the 0.7300 handle heading this morning, topside resistance is still seen around the 0.7350 handle however with today’s employment report posing key risks, downside supports could be tested at the 0.7249 level.

Key Movers

The major event from overnight was the US federal Open Market Committee (FOMC) meeting which failed to surprise markets as the current policy stance was retained. The committee insisted rates will be kept at the current level few at least the next few years and reiterated it will aim for an inflation rate above 2% for some time.

The USD index was largely unchanged, rising only 0.2% however the EUR underperformed. EUR/USD fell from 1.8880 to 1.1788 during trade as ECB officials expressed concerns that the recent EUR strength was having a dampening effect on inflation. USD/JPY also fell below 1.05 to touch a six week low of 104.81.

Expected Ranges

AUD/USD: 0.7275 - 0.7350 ▼

AUD/EUR: 0.6120 - 0.6230 ▲

GBP/AUD: 1.7600– 1.7790 ▲

AUD/NZD: 1.0800 - 1.0900 ▼

AUD/CAD: 0.9600 - 0.9668 ▼

AUD - Australian Dollar

The Australian Dollar continued its upbeat mood on Tuesday opening at 0.7290. Punching through the 73 US cent handle following the latest release of Monetary Policy minutes, intraday highs were seen at 0.7342.

The RBA noted that the current downturn in economic conditions were not as severe as previously forecasted and were maintaining accommodating settings for as long as required. The board also confirmed the cash rate will not be increased till employment levels and inflation are back at their targeted range.

A positive release of Chinese data during the Asian session fuelled an uptick for the local currency during the afternoon trade as Retail Sales (+0.5%) and Industrial Production (+5.6% y/y) both exceeded expectations for the August print.
The Australian dollar opens at 0.7302 ahead of the latest CM and MI Leading Index figures due for release this morning. We expect support levels to hold on moves approaching 0.7260, while any upward push will likely meet resistance at 0.7360.

Key Movers

The USD retreated overnight against the majority of G-10 currencies as investors position themselves ahead of this evening's Federal Reserve interest rate decision. USD/JPY tested two-week lows and the US Dollar Index retreated to 95.80 overnight. There are no expectations of any change in interest rates by the Fed although markets are expecting a potential update on the dot plot for 2023.

Equities were higher fuelled by a rebound in tech stocks, the Nasdaq up 1.2% and the S&P up 0.5% on the day. Oil was also trending higher as the WTI rose 2.25%. Hurricane season arrives in the United States disrupting supply to the market.

The Great British Pound looks to have potentially set a floor this week recovering from two-month lows against the US Dollar. Prime Minister Boris Johnson’s proposed law to override parts of the Brexit agreement with the EU passed through the commons overnight. Up from 1.2790 on open this week to 1.2890 overnight, continued Brexit negotiations looks to be a key driver for the Sterling again after seeing a 6% drop from the start of September.

Expected Ranges

AUD/USD: 0.7260 - 0.7360 ▲

GBP/AUD: 1.7450 - 0.7750 ▲

AUD/NZD: 1.0850 - 1.0920 ▲

AUD/EUR: 0.6120 - 0.6200 ▲

AUD/CAD: 0.9575 - 0.9650 ▲

AUD - Australian Dollar

The Australian dollar is slightly stronger this morning when valued against the greenback, just falling short of the 0.7300 level, despite the rise in Gold prices. Higher risk appetite has lent some support to the Kiwi dollar yesterday which saw selling pressure on the Aussie. While the Kiwi is up 0.6% to over 0.6700, the AUD is barely higher to start the week, seeing NZD/AUD up 0.5% to about 0.9200.

All eyes now turn to the Reserve Bank of Australia (RBA) Meeting Minutes that will be out during the upcoming Asian session. Policymakers are likely to keep rates on hold at a record low of 0.25%, and repeated that the economic downturn “is not as severe as earlier expected and a recovery is now under way in most of Australia.” From a technical perspective, the AUD/USD pair is currently trading at 0.7286. We continue to expect support to hold on moves approaching 0.7250 while now any upward push will likely meet resistance around 0.7310.

Key Movers

The US dollar slipped on Monday against its major counterparts after a positive news about a COVID-19 vaccine lifted the mood in global equity markets. Including reports of Oracle winning the battle for the U.S. arm of TikTok. Drugmaker AstraZeneca on Monday said it resumed its British clinical trials of its COVID-19 vaccine, one of the most advanced in development, helping kick off a rally in stocks.

In the UK the Great British Pound is slightly higher this morning when valued against the Greenback although continues to remain the weakest currency amid Brexit-related turmoil. Overnight the GBP/USD pair reached a daily high of 1.2918 on the back of the dollar’s weakness. The Pound Sterling had its worst week in six months last week, as investors grew more pessimistic about the chances of a Brexit deal being reached before the December 2020 deadline. Looking ahead tonight and the UK will publish its latest employment data. The ILO unemployment rate for the three months to July is foreseen at 4.1% up from the previous 3.8%. The number of unemployed people in the UK is foreseen rising to 100K in August, from 94.4K in the previous month.

Expected Ranges

AUD/USD: 0.7220 - 0.7350 ▲

AUD/EUR: 0.6050 - 0.6250 ▲

GBP/AUD: 1.7580 - 1.7755 ▼

AUD/NZD: 1.0750 - 1.0950 ▼

AUD/CAD: 0.9500 - 0.9700 ▲

AUD - Australian Dollar

The Aussie headed into the weekly close in a relatively stable condition, closing just below the 0.73 level after bottoming out at 0.7191 on Wednesday. Opening this morning at 0.7278, the Aussie continues to take direction from off-shore in lieu of any domestic support.

The Aussie continued to take momentum from global risk sentiment which bounced from risk on to risk off and then back to risk on last week. Initially the Greenback took center stage and strengthened across the board. Ultimately though, the European Central Banks commentary on Thursday supported risk assets which saw the Aussie bounce back to some degree although it struggled to break through 0.73 again.

Moving into a new week, the Aussie again finds itself with a scarce economic calendar early on although there will be a busy Thursday with Australian unemployment, NZ GDP and US FOMC statement to digest.

Key Movers

While the Aussie and the Kiwi were the best performers on Friday, the Euro also had a good showing, rising 0.25% against the Greenback after also succumbing to US Dollar strength earlier in the week. Closing in the green for the sixth continuous week, the Euro benefited from the European Central Banks lack of concern for the strengthening Euro with ECB President Lagarde stating that the ECB note the stronger single currency but currently don’t have any policy to address it.

Across the Channel, the Great British Pound continued its poor run despite a slight bounce back that was short lived. Opening this morning at 1.2793, the Pound has shed 500 pips against the USD over the course of last week as Brexit concerns continue to weigh on the Sterling. With the risk of a no-deal Brexit continuing to climb as December approaches and a clear lack of consensus between the EU and the UK, the Sterling is set to remain under pressure.

Expected Ranges

AUD/CAD: 0.9542 - 0.9651 ▲

AUD/EUR: 0.6101 - 0.6204 ▲

GBP/AUD: 1.7480 - 1.7655 ▼

AUD/NZD: 1.0869 - 1.0974 ▲

AUD/USD: 0.7219 - 0.7351 ▲

Australian Consumer Price Index for Q1/19 came in weaker than expected, falling well below the RBA’s 2-3% target range. The AUD dropped temporarily below the important 0.70 level but then managed to bounce back. The pace of inflation has weakened noticeably which is adding to the case for easier monetary policy. This is making the RBA meeting on the 7th May and RBA Statement on Monetary Policy on the 10th a lively event to keep a look out for.

Oil rallied on the news that the US would not renew its oil sanction waivers that allow countries to buy Iranian oil for 5 nations which included China, India, Japan, South Korea and Turkey. Currencies of oil importing nations such as INR and TRY suffered on the headline while currencies of exporting oil nations such as CAD and NOK strengthened. On Friday, Oil futures dropped 2.9% following mixed Headlines from Russia and US leaders.

The BoC left rates unchanged at 1.75% for the fourth time, as expected, maintaining its dovish tone as the economy faces a slowdown. Their GDP outlook for 2019 dropped to 1.2% from 1.7%, and to around 2% in 2020. USDCAD spiked to 1.3522 at the release of the headline. Governor Poloz afterwards emphasised patience and reiterated that the next move in rates is likely to be a hike than a cut, which help the USDSCAD fall back below the 1.35 handle.

Strong US data propelled the Greenback to increase +0.7% versus the Euro and the Loonie, +0.6% versus the Sterling, and +1.5% versus the Aussie dollar. US domestic GDP came in at 3.2%, when the expectation was 2.6%. Additional data showed that the number of Americans filing for unemployment benefits fell to its lowest level in almost 50 years. Furthermore, the Core Durable Goods Orders rose by the most in eight months in March, showing surprising strength. The USD Index lost some ground at the end of the week as market participants realised that 1.7% of the 3.2% GDP increase came from inventory accumulation and net exports (sparked by a big -3.7% drop in imports).

Japan’s Industrial production shrank at its fastest level since 2015, slipping 0.9% on the month for March as exports slumped. This is a leading indicator for GDP which probably shrank in the first quarter. Governor Haruhiko Kuroda launched a radical program to reflate prices nine years ago, however, the BOJ now projects that it won't accomplish its 2 percent inflation target at least through March 2022. The Japanese Yen was the best performer within the major currencies last week; it rallied 0.3 percent versus the US dollar and 1.8 percent versus the Aussie dollar.

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