Kiwi maintains upward momentum against AUD, poised to test YTD highs.

Key Movers

The Australian dollar suffered overnight as optimism surrounding the US-China G20 agreement faded. The Aussie initially looked like testing the elusive 0.74 handle in Asian trading, touching its highest level since august at 0.7394 before deteriorations in risk sentiment forced the domestic unit lower in line with global equity markets. This was partly due to tweets by US president Trump reaffirming his preference for trade tariffs and ultimately casting further doubt on the US-China trade truce. This saw the Aussie fall to levels nearer to 0.7330 with the AUD/NZD cross also retreating 30 points to 1.0590 as New Zealand dairy auctions met expectations.



Recapping yesterday’s domestic data releases, Q3 current accounts numbers showed a deficit of -10.7bn versus an expectation of -10.2bn while net exports numbers saw exports contribute 0.4% to Q3 GDP, beating market expectations of 0.3%. We also saw the Reserve Bank of Australia maintain their current monetary policy stance at their December monetary policy meeting, opting to keep the official cash rate on hold at 1.5% for the remainder of the year.


The key risk event for the day ahead is the Q3 GDP read due out of the domestic economy. With the report due out at 11:30 EST, markets are expecting a quarterly increase of 0.6% with an annual rate of growth of 3.3%.



Moving into the Wednesday session, topside resistance is clearly evident on moves approaching 0.74 with first resistance evident at 0.7394 on the AUD/USD. First levels of downside support can be seen at 0.7318 before the 0.7300 handle. A break below these levels could see the Aussie test 0.7240.


The Great British Pound retreated during yesterday’s Asian session touching a low of 1.2671 against the US dollar struggling to find any momentum following the release of some disappointing PMI numbers. According to data published by IHS Markit, UK service sector companies experienced another difficult month in November, with both business activity and incoming new work expanding at the weakest rates for almost two-and-a-half years.

The index slumped from 52.2 to 50.4 in November, missing expectations of a modest pick-up to 52.5 and striking a 28-month low. Most importantly however, this leaves the service sector dangerously close to the point of contraction and bodes poorly for UK GDP in the fourth quarter.



As the European and US session carried on the GBP/USD pushed higher touching 1.2797 failing to break the resistance level of 1.2800. Looking ahead, the UK macroeconomic calendar is light and Brexit uncertainty is likely to remain a major catalyst of movement in the pound for the remainder of the week and leading into next.

Technical analysis; Support levels: 1.2730 1.2695 1.2660 with Resistance levels: 1.2760 1.2800 1.2840


It was a quiet day on the U.S. Dollar front as markets were closed as they observed a day of mourning to pay their respects to the late President George H.W.Bush. The New York Stock Exchange and Nasdaq were both closed on Wednesday as stock trading is due to resume on Thursday.

The US Dollar Currency Index (DXY) remained flat trading in a tight range after reaching an intraday high of 97.20. Eventually settling just 0.08% higher for the day, the Index looks to consolidate above the 97.00 handle as liquidity in the market is expected to increase on Thursday.






Released overnight was the latest Beige Book Report which is the release of a summary of commentary on the current economic conditions by the Federal Reserve District. Most districts saw modest to moderate growth over the last two months as consumer spending held steady despite labor markets tightening. Nearly all districts were concerned with the new tariffs in place as trade conflicts continue between the United States and China.


Markets look towards this evenings ADP non-farm employment figures due for release this evening which has been delayed one day due to the closure of markets on Wednesday. This report will be followed closely by non-farm payrolls released on Friday evening.


The Euro finished Wednesday little changed when valued against the Greenback trading around 1.1350. On the release front yesterday EU final Markit Composite PMI for the month of November came in at 52.7, better than the initial estimate of 52.4, but below October's reading of 53.1, hitting its lowest since September 2016. We also saw the release of Retail Sales in the EU which increased by 0.3% for the month October, beating expectations, although the yearly reading fell short of the market's forecast, resulting at 1.7% vs. the 2.1% expected.





Looking ahead today and there are no scheduled releases for the EU with all the attentions turning on Friday’s US data releases particularly ADP Non-Farm Employment and Trade Balance report.

From a technical perspective, the EUR/USD pair is currently trading at 1.1343. We continue to expect support to hold on moves approaching 1.1310 while now any upward push will likely meet resistance around 1.1360.


The Canadian dollar plummets to a 1 week low this morning following the Bank of Canada decision as it held its benchmark interest rate unchanged at 1.75%, as expected. The statement highlighted low prices for oil and cutbacks in crude oil production, that could affect the pace of future rate increases and potential risks to global trade.



Further releases by the bank tomorrow could see a larger decline in the dollar. Just after midnight, the bank will release its statistics on Trade Balance; the difference in value between imported and exported goods during the reported month. Forecasts for this figure sit lower at -0.7B compared to last month at -0.4B. If the actual number is greater than the forecast, this should see a hike in the dollar.

The Loonie opened at 0.7470 this morning.