All eyes on NZ employment figures today

Key Movers

The Australian Dollar opens this morning marginally higher than yesterdays’ open as commodity currencies slightly out-performed in overnight trading. Upside movements were seen after a positive reading for the building sector as new building approvals rebounded in June by 6.4% in seasonally adjusted terms.



The Aussie saw initial movements to 0.7425 before oscillating between 0.7405 and 0.7435 during the release of the eagerly anticipated BOJ meeting which saw a more dovish stance than expected. Inflation forecasts were downgraded and with the decision to keep interest rates at record lows for an extended period of time, introducing forward guidance for the first time in their monetary policy report.

Japanese Yen was sold off in droves and the AUD/JPY cross reached a two week high rallying from 82.20 to an overnight high of 83.20.


The Australian dollar saw overnight highs of 0.7440 before drifting lower into the North American session as United States CB consumer confidence beat expectations.

Looking forward, investors will be focused on this evenings Federal reserve meeting where it is expected rates will remain on hold and currently pricing a 80% of Federal Reverse Governor increasing interest rates in September.

The Australian dollar opens this morning at 0.7425.


The Great British Pound was rather lifeless in overnight trading with momentum almost exclusively being derived from US Dollar strength and weakness. The tight trading range did see the Sterling bounce between 1.3089 and 1.3172 but ultimately the Pair settled in the 1.3120 region this morning, virtually unchanged from Monday’s open.



There wasn’t too much to chew on in overnight trading with the bulk of the movements being driven by the Pounds counterpart, the Greenback. Initially the US Dollar weakened across the board which saw a slight strengthening for the Sterling. However, sentiment reversed sharply when Bloomberg reported that China and the US were looking to restart trade talks in order to defuse the escalating trade war. Markets responded positively to the news which saw the Greenback change course and reverse gains the Pound made earlier in the day. Commodity currencies also responded strongly to the news with CAD and AUD being the best performers. The Aussie climbed steeply against the Pound to post marginal gains over the last 24 hours, ultimately leaving the Sterling in neutral territory across the board.



Attentions now turn to a jam-packed Wednesday and Thursday for direction with Manufacturing PMI numbers slated for release during UK business hours. The USA then ramps up the economic calendar with PMI, employment figures, crude oil inventories and the FOMC statement to digest. The British Pound then looks to close out Thursday with its Inflation report and monetary policy statement.


The US Dollar is gained ground across the board overnight on the back of a dovish statement from the Bank of Japan (BOJ) and news China will now seek to defuse any trade tensions with the US. The BOJ reaffirmed its commitment to maintain rates at record lows after acknowledging that reaching the 2.0% inflation target is taking longer than expected. Traders looking for any sign of some sort of reduction of monetary stimulus rushed to sell back the yen.





On the US data front yesterday June Personal Consumption Expenditures (PCE) inflation report was up in June 0.4%, although core inflation was slightly below market's forecast, resulting in 1.9% YoY, missing expectations of 2.0%. Looking ahead today and all attention will turn to Federal Open Market Committee (FOMC) Monetary Policy Statement which is expected to be a non-event with interest rates to be left on hold at 2%.




From a technical perspective, The USD/JPY pair soared to 111.95, its highest in two weeks, on a combination of a disappointing Bank of Japan’s (BOJ) announcement. The USD/JPY pair is currently trading at 111.87. We continue to expect support to hold on moves approaching 111.75 while now any upward push will likely meet resistance around 112.05.


The Euro traded to a high of 1.1746 versus the greenback yesterday, supported by inflation data coming slightly better than expected (core inflation came at 1.1% YoY versus 1% expected).

Later on, weaker Eurozone GDP data plus strong US data were enough to put a cup on the EURUSD spike and the 1.1750 level acted as good resistance. The Euro reversed gains and closed around 1.1690, 0.13% weaker versus the USD.

We’ll get Manufacturing numbers tonight and Unemployment, PPI and CPI data Tomorrow so expect some volatility on the EURUSD. 1.1650 and 1.1750 will be acting as short-term support/resistance.


With commodities trading higher overnight, supported by Headlines reporting that China-US trade talks are back on, the loonie was able to trade slightly better versus the USD, closing 0.20% stronger at 1.3006.

Despite having been locked out of the NAFTA talks between US and Mexico, Canadian yields and the CAD were supported by a strong GDP print (0.5% QoQ vs. 0.3% expected) but with OIL trading lower this morning, the CAD is starting the Asian session on the back foot.

1.30 proved to be a strong support level for the USDCAD and 1.31 should act as short-term resistance.