Greenback rebounds on positive data

Daily Currency Update

The Australian dollar moved sharply higher in early trade on Thursday touching intraday highs at 0.7467. Buoyed by a surprise uptick in jobs created and a downturn in the unemployment rate the AUD tested resistance at 0.7450 as a second consecutive month of stronger than expected labour market data forced some investors to review RBA monetary policy expectations. Having advanced 50 points throughout Australasian trade investors impetus to buy began to peter out and the AUD moved lower as European and US markets opened. Upbeat and robust U.S unemployment claims and manufacturing data then compounded the correction forcing the AUD toward supports at 0.7390/0.7400. Opening this morning at 0.7419 attentions now turn to next week’s FOMC meeting minutes and U.S GDP data with U.S political uncertainty driving direction in the interim.

During the UK session the Great British Pound rallied to a fresh 8-month high of 1.3047 against the Greenback following the release of strong UK Retail Sales figures which jumped by 2.3% on a monthly basis. On the back of impressive April retail sales figures the GBP/USD pair finally broke through the 1.300 level. However, the U.S. dollar briefly surged against major currencies Thursday afternoon in a move traders initially could not explain. The Pound Sterling lost over 100 pips in a matter of seconds. The GBP/USD pair is currently trading at 1.2943. We now expect support to hold on moves approaching 1.2900 while any upward push will likely meet resistance around 1.2995.

The New Zealand dollar has stalled in its attempt to push through the 0.70 cent handle against the American dollar, a level not seen now since mid-April. Hovering around May 8th resistance levels of 0.6950, the NZD/USD cross pulled back on general US Dollar strength overnight after a boost in economic data out of the United States. Seeing an intraday low overnight of 0.6885, the Kiwi looks to recover above the 0.6900, and opens this morning at 0.6895.

The US Dollar has rebounded overnight supported by positive US macroeconomic data, the Philadelphia Manufacturing Index unexpectedly improved in May jumping to 38.8 from a reading of 22.0 in April - the expectation was a drop to 19.5. Assisting the strength of the Greenback were the number of people who filed for unemployment in the US, Jobless Claims dropped by 4,000  which is showing continuing strength in the labour market. Meanwhile in Europe minutes from the latest meeting revealed that policymakers may looking at pulling back on stimulus given the improving outlook for the economy. EUR/USD has retreated down from 1.1172 to  1.1075 and USD/JPY currently buying 111.39