Kiwi testing 68 US cents on open

Key Movers

The Australian Dollar appreciated against its US counterpart as optimism returned to the currency. Intraday trading told a different story however with the Aussie sliding to 0.7340, a 2-week low. As the day progressed, the Pair recovered strongly to touch 0.7409, riding the recovery in global risk sentiment. Changing hands this morning at 0.7398, the Australian Dollar looks to break and hold above the 0.74 handle with a keen eye on employment figures to provide the impetus.



The day was a story of two halves with the Asian session mostly subdued. Risk assets were whittled lower, including the Aussie, in the lead to Fed Chair Powell’s second testimony to the Senate. Fortunately for the Pair, Fed Chair Powell’s testimony was mostly bereft of any new clues which saw risk-sentiment recover across the board. Equities and commodity currencies all posted positive gains and saw the Aussie in particular, recover steeply.




Moving forward, the domestic economic calendar has a little more to digest. Initially, all eyes are on Australian employment figures with the Australian economy tipped to add around 17,000 jobs. NAB is also looking to release their quarterly business confidence report and the unemployment rate is due to stay steady at 5.4% today.


The Great British Pound tumbled yesterday touching a new year-to-date low of 1.3010 following the release of the latest June CPI report. The projection was to rise 2.6% with core remaining stable at 2.1% however, the data surprised on the downside, coming in flat month-on-month. Core inflation was at 1.9% year-on-year and headline CPI at 2.4% year-on-year.

Large downward effects came from clothing and footwear, as retailers resisted discounts in May on great weather, but eventually had to go ahead with them in the face of ongoing weak demand in June. This data has reduced market pricing for a rate hike at the Bank of England’s 2 August meeting, but the probability remains high (at around 75%-80%).



Attentions now turn to UK Retail Sales today. Consumers were out and about spending in May, as headline sales leaped by 1.3%. A more modest increase of 0.2% is on the cards now. The publication tends to have a strong, yet a short-lived impact on GBP/USD.

It has been a rough week for the Sterling, yesterday’s soft CPI, weak employment on Tuesday and the continued dispute over Brexit and negotiations with the EU the Pound could face further pressure. Support seen now at 1.3010 and resistance up at 1.3100


The US Dollars advance steadied through trade on Wednesday as Investors looked to take stock and recoup profits following the early week uptick. Having touched three-week highs at 95.40 the dollar index edged marginally lower into the daily close ending the day just two tenths of a percent higher at 95.08.




While edging upward against key counterparts in the Japanese Yen and Euro the dollars drive came against traditional high yielding assets in the AUD, CAD and NZD. Powell’s testimony supported the current path to monetary policy and calmed fears the Fed will need to alter its path to combat hostile trade discussions fueling demand for the worlds base currency as the yield return edges beyond the traditional high yield partners.



Attentions now turn to upcoming G20 meetings for a further insight into the trade narrative while Core Durable Goods Orders and Preliminary Q2 GDP numbers dominate next weeks docket.


The Euro lost 0.2% versus the dollar, closing around 1.1639 after trading as low as 1.1602.

The Euro started the London session on the back foot, and then extended losses as USD gained momentum across the board. Eurozone CPI data came as expected at 2% on the YoY basis, but it missed slightly on the core CPI reading, which came at 0.9% (versus 1% expected).
The 1.16 level acted as good support and the EURUSD was able to bounce from there after US housing starts data came much weaker than expected (-12.3% vs -2.2% expected). The Euro paired losses and bounced back above 1.1650, then settling around 1.1640.
Support and resistance levels are stable at 1.16 and 1.1729 respectively


The loonie was able to outperform the USD by 0.2% with USDCAD closing at 1.3170 on the back of higher WTI oil prices, which were up 1.3%.

The CAD paired losses after being down 0.5% due to broad USD strength, which saw the USDCAD trading as high as 1.3260. But the USD reversed gains after the US housing starts data miss, broke back below the important 1.32 level, and settled around 1.3170.

We continue to see short-term support/resistance levels for USDCAD at 1.3120 and 1.3220 respectively.