Daily Forex Commentary

27 September 2017 - Aussie falls under 79c for the first time in four weeks

By Sai Muthen

New Zealand Dollar:

The New Zealand Dollar enjoyed a roller coaster overnight session initially sliding to a low of 0.7167 before recovering to open this morning at 0.7211. The Federal Reserve’s Chair Yellen drove a resurgent Greenback during the American session that saw most major currencies fall significantly, including the Kiwi. Earlier in the day, the New Zealand Dollar had traded lower for much of the day as the ANZ business outlook survey portrayed a declining confidence in economic conditions. Traders have also deemed the political uncertainty with the New Zealand election as a bridge to far and have sold down on the Kiwi, further exacerbating the sell-off. With the NZD consolidating slightly above 0.72 this morning, Investors now turn to Thursdays cash rate announcement and RBNZ statement for direction.

We expect a range today of 0.7100 – 0.7300

 

Australian Dollar:

The Australian Dollar opened weaker this morning when valued against the Greenback reaching its lowest level of 0.7859 since August 16. The greenback was given an early boost by renewed talk about the prospect of US tax reforms being back in play with the Trump administration to unveil a stimulative tax reform plan over the next 24 hours. The US Dollar held on to the gains as the Federal Reserve’s Chairwoman Janet Yellen reiterated in her speech yesterday the case for another rate hike later this year. The AUD/USD pair is currently trading at 0.7885. We now expect support to hold on moves approaching 0.7840 while any upward push will likely meet resistance around 0.7920. 

We expect a range today of 0.7785 – 0.8000

 

Great British Pound:

The Great British Pound traded flat heading into the UK domestic session, not able to push through the 1.35 handle. A brief test of 1.3510 eventuated before Sterling declined on negative flows by the Euro and general weak undertone as the Greenback remains the favoured currency of late. Cable lows were seen at 1.3410 during the North American session after Atlanta Fed President Raphael Bostic said he was “comfortable’ with a December rate hike. Mixed reactions were seen after Yellen spoke of monetary policy to remain on hold till inflation pushed higher in the United States. The Great British Pound pushed slightly higher post speech and opens this morning at 1.3460. Sterling also trades higher against the Australian Dollar at 1.7070 and Kiwi – 1.8660.

We expect a range today of 1.8500 – 1.8800

 

Majors:

The US Dollar rallied against most major counterparts overnight prior to Janet Yellen speaking at the National Association of Business Economics Annual Meeting in Cleveland. Her speech reaffirmed the central banks view that raising rates gradually is the most appropriate policy measure and is prudent to hold until inflation reaches the 2% target range. Non-voter Federal Reserve Bank of Atlanta President Raphael Bostic also spoke saying he was pretty comfortable with an increase in December. Markets are now pricing around a 70% chance of a December rate hike. EUR/USD has pulled back further reaching a low of 1.1757 as the German federal election has dented sentiment towards the Euro. On the data from New Home Sales in the US fell 3.4% in August to an annual rate of 560,000 units while House Prices have climbed steadily in July.

 

Data releases:

AUD:

No Data

NZD:

No Data

JPY:

No Data

GBP:

CBI Realized Sales

EUR:

M3 Money Supply; Private Loans

USD:

Core Durable Goods Orders; Durable Goods Orders; Pending Home Sales; Crude Oil Inventories; FOMC Member Brainard Speaks

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