Daily Forex Commentary

20 December 2016 - Australian dollar hovers near six-month low

By Michael Judge

New Zealand Dollar:

    

Failing to provide a great deal of support to the New Zealand dollar a survey released yesterday revealed a pickup in business confidence, led mainly by the construction industry. Spending the majority of Monday’s session trading below the psychologically important 70 US Cents threshold, the Kiwi has once again struggled to front up when valued against the current might of the Greenback, following some hawkish commentary delivered by US Federal Reserve Chair Janet Yellen overnight. Opening notably weaker the New Zealand dollar currently buys 69.28 US Cents.

We expect a range today of 0.6880 – 0.6960

Australian Dollar:

All in all doing a good job in shrugging off a statement from Treasurer Scott Morrison yesterday who announced a drop in this year’s projected financial deficit from $37.1 billion to $36.5 billion, ratings agencies Fitch and Moody have been quick to re-affirm Australia’s Triple-A credit rating, a move which saw the Australian dollar avoid worse case scenarios during the early parts of yesterday’s session. Still a long way from the highs witnessed mid-last week up above the 75 US Cents handle, rhetoric from the US Federal Reserve overnight which noted the strength of the US labour market has however weighed heavily on the Australian dollar which currently swaps hands at a rate of 0.7249 versus its US Counterpart.

We expect a range today of 0.7220 – 0.7320

Great British Pound:

The Great British Pound has been on a downtrend against the US Dollar which was triggered in July following the UK’s referendum outcome to leave the Eurozone. The Cable has lost around 18% in 5 months being one of the worst preforming majors of the year. It was quiet on the data front yesterday and therefore offshore events dictated, in a speech to US graduates  Janet Yellen, the Fed Chair said the labour market in the United States was its ‘strongest’ in nearly a decade proving support to the US dollar. GBP/USD touched 1.2360 but has since recovered currently changing hands at 1.24. Tonight we see the release of CBI Realised Sales, a measure of consumer spending.

We expect a range today of 1.7740 – 1.7980                                      

Majors:

A cautious tone underpinned currency movements through trade on Monday as the US Dollar Index edged marginally higher. Rising geo-political tension saw the world’s base currency relinquish gains against both the Japanese Yen and Swiss Franc while an upbeat Janet Yellen bolstered expectations the improving labour market will drive wages higher. Investors scramble toward safe haven currency assets after reports of separate attacks in Germany and Turkey emerged. Nine people have been killed and 50 wounded in Berlin as a truck careened into a crowded Christmas market while the Russian Ambassador to Turkey was assassinated by a lone gunman in an Ankara gallery. A nervousness spread through currency markets as the attacks come on the back of increased fighting in Syria and uncertainty surrounding US and China relations after China seized U.S naval drones on Friday. Slipping back below 117 and touching intraday lows at 116.57 against the Japanese Yen the USD opens lower against the haven asset as attentions turn to the BoJ and its final monetary policy announcement and statement for 2016. 

Data releases

AUD:

Monetary Policy Meeting Minutes

NZD: FPI m/m

JPY:

 BoJ Policy Rate, Monetary Policy Statements and BoJ Press Conference

GBP:

CBI Realised Sales 

EUR:

German PPI m/m and Current Account

USD:

No Data 

 

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