Daily Forex Commentary

10 October 2017 - AUD losses extended as key technical supports loom closer

By Sai Muthen

New Zealand Dollar:

The New Zealand Dollar saw an immediate drop on open yesterday as political uncertainty clouded the local currency. With meetings ongoing this week to try and form government, First Party currently holds balance of power, with continued Negotiations between parties after the final vote tally over the weekend. The Kiwi dropped from 0.7090 to 0.7050 before trading sideways on thin trade due a public holiday in the United States. The NZD/USD saw an intraday high in overnight trading of 0.7085 before drifting to 0.7065 on open this morning. Any further news or outcomes from the election result is likely to have the local currency on edge.

We expect a range today of 0.6985 – 0.7135

 

Australian Dollar:

The Australian Dollar is weaker today when valued against its US counterpart falling overnight to 0.7747. The Aussie remains near the 2-month low it reached last Friday at 0.7731. A quiet session yesterday with a limited trading range between 0.7745 and 0.7765. The macroeconomic calendar has little to offer today with the only release of the NAB Business Confidence at 11.30am AEDT. The AUD/USD pair is currently trading at 0.7753. We now expect support to hold on moves approaching 0.7730 while any upward push will likely meet resistance around 0.7790.

We expect a range today of 0.7730 – 0.7830

 

Great British Pound:

The Great British Pound was among the best performers against the Greenback in overnight trading, reaching a high of 1.3183 before gradually falling to today’s open of 1.3145. The Sterling enjoyed a positive day, starting with a surprise correction from the Office of National Statistics. The ONS revised their early 2017 Unit Labour Costs from 1.6% to a healthy 2.4%, further strengthening the Hawks position in the rate hike discussion. On the political front, PM Theresa May found some support with the conversation shifting to a possible cabinet reshuffle, further stabilising the Pound. Despite the positive headlines, traders sold the Cable down slightly as they position themselves for the fifth round of Brexit talks as well as Manufacturing Production numbers.

We expect a range today of 1.8475 – 1.8675   

 

Majors:

In what was a quiet and lacklustre start to the trading week the U.S dollar index edged marginally lower as major currencies maintained relatively tight trading bands. With U.S, Japanese and Canadian markets all closed as local residents enjoyed a long weekend directional drivers were largely absent while volumes and liquidity were decidedly thin. Bouncing about amid a 25-point range against the Yen the Dollar struggled to push through 1.1275 while the Euro held on above 1.1750 having plunged from highs near 1.21 just last month. Momentum behind the US dollar continues to gather strength as investors find renewed confidence in calls for a December rate hike and Republican tax reform. Having recouped 3% of the losses suffered since January the dollar is poised to break higher as investors look to December a critical juncture for medium term direction. Attentions now turn to the Fed’s FOMC meeting account Wednesday and Friday’s inflation and retail sales prints as markers guiding expectations for a monetary policy adjustment.

 

Data releases:

AUD:

NAB Business Confidence and RBA Assistant Governor Debelle Speaks

NZD:

No Data

JPY:

Current Account and Economy Watchers Sentiment

GBP:

Manufacturing Production m/m, Goods Trade Balance, Construction Output, Industrial Production, NIESR GDP Estimate

EUR:

German Trade Balance, French and Italian Industrial Production and ECONFIN Meetings

USD:

FOMC Member Kashkari Speaks and IBD Economic Optimism

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