Daily Forex Commentary

29 September 2017 - Australian Dollar bounces off 78c

By Sai Muthen

New Zealand Dollar:

The New Zealand dollar edged higher throughout trade on Thursday as profit taking and quarterly line management forced the USD to recant gains enjoyed through recent days. The RBNZ’s rate announcement offered little to excite investors and left the Kiwi at the mercy of offshore markers. Having touched intraday lows at 0.7166 on proposals of wide reaching U.S tax reform the NZD rallied breaking higher and moving back through 0.72 U.S cents as investors sold into the extended USD rally and squared positions leading into month’s end. With support at 0.7170 attentions turn to next week’s U.S Non-farm payroll number for macroeconomic direction.  

We expect a range today of 0.7100 – 0.7300

 

Australian Dollar:

The Australian dollar tested key technical supports through trade on Thursday moving through 0.7830 and touching intraday lows at 0.78. The Aussie suffered a steep sell off following proposed changes to both private and corporate tax systems by U.S president Donald Trump. The suggested tax amendments, if passed, would mean the biggest shift in U.S taxation for 30 years and sparked confidence that the republican leader may deliver some of the promises proffered last November. Having found support at 0.78 the Aussie rallied into the close as profit taking and quarterly position management forced a correction in the USD and we open this morning buying 0.7854 U.S cents. Attentions now turn to next Tuesday’s RBA rate announcement and monetary policy statement for further direction and guidance on monetary policy divergence as we watch key supports at 0.7830 and 0.78. A break and consolidated close below these thresholds could signal a shift in short term ranges.

We expect a range today of 0.7750 – 0.7950

 

Great British Pound:

The Sterling bucked the downward trend of the week and regained some of its’ losses in overnight trading. Opening this morning at 1.3437, the Pound enjoyed a positive boost from across the Atlantic as the Greenback retreated despite the uplifting increase in US GDP figures. After a four-day rally, the USD lost some of its steam, forcing the Pound higher in the process. Within the European sphere, the GBP also benefitted from positive feedback from EU chief negotiator Barnier who described Brexit negotiations as ‘constructive’. The Cable now turns to the Current Account statistics and GDP numbers for further direction with one eye on Governor Carney’s closing speech on Saturday.

We expect a range today of 1.8500 – 1.8700

 

Majors:

The Euro continued to move lower during Asian trade yesterday against the Greenback as Trumps tax proposals were being digested by Asian markets. The EUR/USD touched a low 1.1721 before the pair ticked back up towards the 1.18 handle during the European session. On the data front German GfK Consumer Climate edged lower to 10.8, which was shy of the estimate of 11.00 and German Preliminary CPI came in unchanged at 1.8 for September. A mixed bag out of the USA - US GDP figures were revised up more than expected and jobless claims were also up. A raft of macroeconomic releases this evening, eyes will be focused on German Core CPI as well as US Fed Central Bank member Harker speaking.

 

Data releases:

AUD:

Private Sector Credit

NZD:

Building Consents

JPY:

Household Spending; Unemployment Rate; Retail Sales

GBP:

Current Account; Final GDP; Net Lending to Individuals; Mortgage Approvals; BOE Gov Carney Speaks

EUR:

German Retail Sales; Core CPI Flash Estimate; ECB President Draghi Speaks

USD:

Core PCE Price Index; Personal Spending; FOMC Member Harker Speaks

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