Kiwi range bound ahead of mid-week data

Key Movers

The Australian Dollar failed to capitalise on broader USD softness Friday again struggling to gain any real traction on moves above 0.74 U.S cents. Attentions were squarely focused on the much-anticipated US Advance GDP print ensuring the AUD remained range bound for much of the domestic session before enjoying a short 30 point jump when data printed below expectations at 4.1%. Touching intraday highs at 0.7412 the AUD edged lower into the close and opens this morning buying 0.7401 U.S Cents.



Despite missing market expectations US GDP presented its strongest quarterly performance in nearly 4 years underpinning recent US strength and adding additional support to calls for 2 further interest rate hikes before year end. While there is a broader concern the US will see the ill effects of trade frictions and suffer a slow down in growth through the second half of the year we expect the AUD will continue to trade heavy and struggle on moves approaching 0.75. The widening gap in monetary policy expectation and the increasing US yield differential are hampering upside momentum and when coupled with the downward pressures plaguing the CNY there is little scope for extended AUD strength through the short and medium term.


Attentions now turn to Thursday’s Trade balance report for domestic direction while Tuesday Bank of Japan policy meeting poses a significant risk event with implications for global bond markets and broader currency flows.


The Great British Pound enjoyed a reasonably quiet Friday to close out the week, oscillating within a tight range. Opening this morning at 1.3108, the Sterling looks forward to a packed week for direction.



The Cable welcomed a quieter Friday after another precipitous fall on Thursday due to fresh Brexit concerns. Again, the catalyst was concerns of an increasingly likely ‘no-deal’ Brexit. Within this context, the Pound limped along to the close with only a poorer US Q2 GDP figure to marginally support the Sterling.



Despite the slow start to the week, the Great British Pound does look set to enjoy a packed economic calendar to drive direction. The Bank of England are set to release their household borrowing figures shortly and their policy decision on Thursday. UK PMI survey’s are also slated for release on Wednesday.


The Greenback found support on Friday on the back of US President Donald Trump comments hinting a strong US Gross Domestic Product (GDP) figure. The actual GDP number for Q2 growth matched market's expectations, with the economy up 4.1%, the fastest pace of growth in four years. US trade wars continued to make headlines with US Donald Trump pulling back from imposing tariffs on cars' imports, and in a joint statement with the EU, both pledged to work together toward zero tariffs.




It’s quite a busy week ahead in the US macroeconomic calendar starting on Tuesday with the June Personal Consumption Expenditures (PCE) inflation report. On Thursday sees the release of the Federal Reserve monetary policy meeting (FOMC Statement). The Federal Reserve is highly unlikely to raise rates at its policy meeting leaving interest rates at 2%. Finally on Friday sees the release of the US Nonfarm Payroll report. The US is expected to have added in July 195K new jobs, the unemployment rate is expected at 3.9% while wages are seen holding within their recent levels, up 0.3% MoM and 2.7% YoY.



From a technical perspective, the US Dollar has opened weaker against the Australian Dollar (0.7402) and the Great British Pound (1.3108). The Greenback is slightly stronger against the Euro (1.1658) but still within familiar levels, at around 1.1660.


The Euro spiked 0.3% on Friday, to close around 1.1657. EURUSD was trading on the session lows around 1.1625 prior to the US Q2 GDP data. Expectations had been built but the overall number came slightly weaker than expected and the USD dropped against most majors.

EURUSD spiked more than 30 pips on a short period of time and is now opening the Asian session almost flat, just below 1.1660.

This week is setting up to be a very interesting one with Central Bank meetings (Japan, US & England), Eurozone CPI and US manufacturing and inflation gauges. Plus the now usual geopolitical drama.


The loonie strengthen marginally on Friday after the US had a slightly lower than expected GDP print. USDCAD dropped 0.15% to close around 1.3055 and the CAD is opening slightly weaker on Asia around 1.3062.

This week will bring back-to-back Central Bank policy meetings from Japan, the US and England which should provide further hints on how well the USD is positioned against other major currencies. We’ll also get GDP and manufacturing PMI data out of Canada.

Keep an eye on the 1.30 and 1.3150 levels which should be acting as support and resistance in the short term.