Daily Forex Commentary

03 January 2017 - Greenback rises for a fourth straight year

By Michael Judge

New Zealand Dollar:

    

In a relatively quiet start to the New Year the NZD/USD opens in a weaker position this morning extending a decline which first started during the US session overnight on Friday. Bottoming out a rate of 0.6919 when valued against its US Counterpart it was the Greenback which recovered from a two week low on Friday, providing a tough environment for the Kiwi to advance. Whilst a weaker than expected Chinese PMI report over the weekend has also contributed to the softer start this morning overall market conditions still remain somewhat muted. The New Zealand dollar currently buys 69.27 US Cents.

We expect a range today of 0.6900 – 0.6960

Australian Dollar:

Unable to hold its ground up above the 72 US Cents mark to end 2016, the Australian dollar failed to gain any traction during the final week of last year, running into to some fresh and weighty resistance on approaches towards 0.7240. Amid daily volumes which sat consistently 30% lower than its 30-Day moving average, active participants will be eager to see trading volumes and liquidity normalise over the next 24 hours. In light of a Greenback run which has now stretched into its third straight month, manufacturing prints out of China and the United States over the comings days are likely to provide markets with their first key risk event. Kicking off in a modestly lower position, near-term consolidation will be first and foremost for the Aussie as the broader bias still sits with the world’s reserve currency. This morning the Australian dollar currently buys 71.80 US Cents.

We expect a range today of 0.7140 – 0.7220

Great British Pound:

The Great British Pound has retreated over the past two sessions following a strong bounce back from the world’s reserve currency. With technical indicators turning south the Sterling broke down reaching an eventual low of 1.2276 versus the Greenback. With flows still very light, this is likely to change this evening ahead of a Manufacturing PMI read from Britain’s economy. With a three day window this week finally being littered with key macro events, its likely investors will be asked to absorb their first dose of volatility for the New Year. Opening lower versus the Greenback (1.2281), the Sterling opens stronger versus the Australian dollar (1.7089) and the New Zealand dollar (1.7715).

We expect a range today of   1.7660 - 1.7760

Majors:

Following a late year rally in which the US election pushed stocks to fresh new peaks, promises of multiple interest rates rises from the US Federal Reserve has investors looking into the new-year hopeful that the flourish of positive activity witnessed since November will carry through into January. Recovering from a two-week low versus a basket of six major currencies yesterday, the Greenbacks sell-off over the past fortnight has been more an indication of profit taking rather than investors in fact trimming their bullish bets on the world’s reserve currency. Having notched up a 4 percent rise last year, the US Dollar has now finished higher for a fourth consecutive year as investors look in the near-term towards Friday’s non-farm payroll report to re-confirm the FOMC’s positive rhetoric in reference to US Labour markets. Opening stronger when valued against a basket of six major currencies the Greenback is stronger versus both the Japanese Yen (117.640) whilst weaker versus the Euro (1.0457).

Data releases

AUD: 

AIG Manufacturing Index   

NZD: Bank Holiday   

JPY: 

 Bank Holiday   

GBP: 

Manufacturing PMI 

EUR: 

German Prelim CPI m/m

USD: 

No data today  

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