Daily Forex Commentary

18 September 2017 - Great British Pound continues its advance higher

By Benjamin Hiscox

New Zealand Dollar:

 

The New Zealand dollar closed the week on a strong note against the greenback on Friday reaching a high of 0.7309, up 0.96% for the session. There were no significant data releases on Friday in New Zealand so the rally was on the back of weaker than expected US retail sales and overall market risk sentiment. We are predicting another quiet day ahead in New Zealand with no scheduled data releases. The NZD/USD pair is currently trading at 0.7298. We now expect support to hold on moves approaching 0.7240 while any upward push will likely meet resistance around 0.7329.

 

We expect a daily range of 0.7200 - 0.7300

 

Australian Dollar:

 

The Australian Dollar closed the week lower against the US Dollar despite Thursdays strong local labour market data. The AUD/USD pair bounced off lows of 0.7986 and touched a high of 0.8034 as investors remained focused on this week’s upcoming U.S Federal Policy announcement. Hopes that the two-day meeting may provide further hints about the central banks plans for tightening rates caused a shift in sentiment. The Aussie opens just under 80c this morning and with the absence of any local top tier data, the Aussie is likely to find resistance around 0.8050, with support levels at 0.7940.

 

We expect a daily range of 0.7950 - 0.8050

 

 

Great British Pound:

 

The Great British Pound surged to its highest point since the Brexit vote in June last year to close out last week hitting a high of 1.3615. Opening this morning at 1.3584, the Pound posted an impressive increase of 1.5% as MPC members continued to surprise the market with their hawkish sentiments. The catalyst being MPC Vlieghe, a noted dove indicating that a rate hike is possible in the coming months. On the back of this surprise statement, the Market has now priced in a 65% chance of a rate hike in November, up from a 3% chance last week. The Sterling now looks to its Cable counterpart for further direction this week with a relatively slow domestic economic calendar.

 

We expect a daily range of 1.8600 - 1.8800

 

Majors:

 

The greenback rally after a stronger than expected United States inflation print halted on Friday evening. The Latest Retail sales figure fell for the month of August while industrial output saw its biggest drop since 2009 as Hurricane Harvey and Irma expects to have further impacts on the American economy over the coming months. The news sent the DXY lower, closing 0.23% lower for the day with equities flat. The EUR/USD cross tested weekly highs of 1.1985 on Friday evening, falling back to 1.1920 on close as the common currencies next movements will be seen this evening on the release of Eurozone inflation for the month of August. With a risk on environment we saw USD/JPY push to an intraday high of 111.32 before pulling back to 110.80 following the release of American macro data. We expect light on trading today as Japan pauses for a public holiday.

 

Data releases:

 

AUD: 

New Motor Vehicles sales m/m

NZD: 

No Data

JPY: 

Bank Holiday

GBP: 

No Data

EUR: 

Italian Trade Balance, Final CPI y/y, Final Core CPI y/y, German Buba Monthly Report

USD: 

NAHB Housing Market Index

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