Daily Forex Commentary

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28 December 2016 - Markets flat, volumes thin.

By Michael Judge

New Zealand Dollar:

    

The New Zealand dollar has enjoyed a period of consolidation through the Christmas holiday period with investors still mainly favouring a shift back into the world’s reserve currency. With the US dollar still sitting at a 14-year high, driven mainly by the promise of higher interest rates over the coming 12 months as well fiscal assistance from president-elect Donald Trump, consumer sentiment along with the performance of global equity markets has kept the Kiwi’s value in tact amid thin trading conditions. Opening virtually unchanged the New Zealand dollar buys 68.86 US Cents.  

We expect a range today of 0.6840 – 0.6950

Australian Dollar:

During a typically uneventful holiday interrupted session yesterday the Australian dollar flat-lined when valued against its US Counterpart. Having traded to its lowest point in six months during December, a strengthening Greenback once again proved to be its downfall in lead up to Christmas with key economic indicators from the world’s largest economy painting an overall optimistic picture for 2017. Slumping below the 72 US Cents mark the Australian dollar opens this morning lower as it currently buys 71.82 US Cents.

We expect a range today of 0.7140 – 0.7220

Great British Pound:

Whilst broader moves have been very much limited over the past 24 hours, the Great British Pound has struggled to find any upward support when valued against the Greenback this month. With the Sterling’s push towards recapturing ground at the 1.2300 mark failing, a push higher particularly this past week has resulted in a fading rally. With no economic announcements expected this week, it will be the role of equity markets to support sentiment as currencies drift ahead of conditions which aren’t expected to normalise until the New Year. Opening lower versus the US dollar at a rate of 1.2276, the Sterling is marginally stronger versus the Australian dollar (1.7089) and the New Zealand dollar (1.7823).

We expect a range today of 1.7760 - 1.7860

Majors:

The US Dollar advanced through trade on Tuesday buoyed by an uptick in housing data and continued expectations for tighter monetary policy throughout 2017. House prices in metropolitan areas rose at a faster pace than was expected in October, consolidating gains seen through September and underpinning suggestions the economy is on track. Moving back through 117 JPY the Greenback stopped short of ten month highs touching 117.61 while the Euro maintained a tight 30 point trading band in thin holiday trade. Despite the lack of volume the dollar’s upside trajectory remains intact as investors continue to draw on expectations a Trump presidency and a renewed Washington will drive inflation and foster domestic growth. Increasing fiscal stimulus is expected to put pressure on the Fed and FOMC to raise borrowing costs at a faster pace in 2017 and that in turn is forcing treasury yields higher. With little of note on the docket today attentions will be turned to U.S consumer confidence numbers and a return to full trade as all markets re-open following the Christmas break.

Data releases

AUD:

No data today.

NZD: No data today.

JPY:

 No data today.

GBP:

Bank Holiday.

EUR:

No data today.  

USD:

CB Consumer Confidence.

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