Daily Forex Commentary

08 September 2017 - Aussie testing fresh two-year highs

By Sai Muthen

New Zealand Dollar:

 

The New Zealand dollar rallied strongly through trade on Thursday touching intraday highs at 0.7242 and regaining much of the losses suffered early in the week. After a lacklustre domestic session wherein supports at 0.7190 were again tested the Kiwi moved higher, benefiting from broadside USD weakness. Greenback softness in response to the ECB’s policy announcement and the lingering impact of the BoC’s surprise rate hike, when coupled with a declining expectation the Fed will tighten monetary policy conditions in December all forced investors to short USD holdings enabling further upside across its G-10 counterparts. Opening this morning at 0.7230 the NZD gave up more ground against the AUD breaking below 0.90 and touching 0.8980.

 

We expect a range today of 0.7140 – 0.7280

 

Australian Dollar:

 

The Australian dollar’s upward trajectory continued through trade on Thursday edging through a point of key technical resistance and touching intraday highs at 0.8050.  A decline in domestic retail sales and a smaller than anticipated trade balance print did little to dampen demand for the AUD as it remained steady throughout the Australasian session; making multiple attempts to extend beyond the 0.80 handle. The Aussie then found support and moved higher as investors looked to short USD holdings. The Greenback succumb to broader weakness as investors responded to the ECB’s policy announcements and further amended expectations for a December rate hike following the resignation of Fed Vice President Stanley Fischer. As a bystander the AUD took advantage and touched 2 month highs and looks poised to break the peak enjoyed throughout the July uptick. Attentions now turn to RBA Governor Lowe for monetary policy commentary while Chinese inflation data and Canadian labour market conditions dominate the offshore docket.

 

We expect a range today of 0.7950 – 0.8090

 

Great British Pound:

 

The Great British Pound jumped higher Thursday, surging through 1.31 for the first time in 5 weeks. An improvement in house prices and broader USD weakness helped fuel support for the embattled unit and saw it touch intraday highs at 1.3116. Sterling joined G-10 counterparts in extending gains against the US dollar as the worlds base currency suffered losses across the board. Despite the gains enjoyed against the USD, the Pound moved lower against the Euro touching intraday lows at 1.0868 as ongoing Brexit negotiations continue to weigh on GBP as attentions turn to domestic manufacturing data for direction into the weekend.

 

We expect a range today of 1.7975 – 1.8175

 

Majors:

 

The Euro hovered around the 1.19 level for most of the early Asian session before the ECB‘s president caused EUR/USD to rally. Defying warnings from Mario Draghi in his Press Conference that a stronger euro could have negative consequences the bulls pushed the EUR/USD through the 1.20 level to touch an eventual high of 1.2059. A higher dollar can lead to an increase in imports which ultimately can weigh on inflation, something the ECB is closely monitoring. With the ECB’s current purchase program due to end in December, they have not yet decided how to proceed next year. Meanwhile in the U.S, initial jobless claims rose from 236k to 298k last week, this was the highest since 2015 and could have been impacted with Hurricane Harvey.

 

AUD:

Home Loans; RBA Assist Gov Debelle Speaks

NZD:

Manufacturing Sales

JPY:

Final GDP; Bank Lending; Current Account

GBP:

Manufacturing Production; Goods Trade Balance; Construction Output; Consumer Inflation Expectations; Industrial Production

EUR:

German Trade Balance; French Industrial Production;

USD:

FOMC Member Harker Speaks; Final Wholesale Inventories; Consumer Credit

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