Kiwi unsteady in face of broader softening in risk

Key Movers

The Australian dollar’s multi-day decline extended overnight due to dovish comments from RBA deputy governor Debelle coupled with softness in commodity and European equity markets. With markets adopting a risk-off modd, the Aussie dipped below the key 0.72 handle, touching intraday lows of 0.7192 before being bid back up to 0.7225. Continuing its recent trend the AUD/NZD cross also fell to 1.0476, representing it’s lowest level since July 2017.



Recapping yesterday’s retail sales numbers, retailers reported a 0.3% increase in sales for the month of October which was largely in line with market expectations. Whilst sales growth is still not strong by historical standards, analysts were quick to point out the numbers are looking much stronger than they did in the mid-year read. Last night also saw RBA deputy governor deliver a speech in which he stated there is still scope for reductions in the cash rate if economic conditions demanded it and also suggested the bank could deploy QE if a future crisis presented itself. He did reiterate that the next move in the cash rate would likely be up but highlighted tightening credit standards as an area of concern.


Domestic releases are done for the week as the Aussie will now look to Non-Farm payrolls due out of the world’s largest economy tonight. Markets are expecting a rise of 198K after last months blockbuster beat and will also be paying close attention to consumer sentiment data and some Fedspeak on financial stability from board member Brainard.




On the technical front we see minor support for the AUD/USD around the 0.7190 region however expect any moves through this level to test the 0.7130 handle. On the topside, 0.7280 has now become the first line of resistance heading into today’s session.


The Great British Pound is stronger this morning when valued against the Greenback reaching a daily high of 1.2811 amid broad dollar's weakness and with Brexit concerns being put aside ahead of the key Parliamentary vote that will take place next Tuesday.



Looking ahead today on the release front and the Bank of England will release its Consumer Inflation Expectations for the upcoming 12 months, previously at 3.0%. The market's reaction to the release is expected to be limited, with all attentions turning on today’s US employment data and associated risk-related factors.



From a technical perspective, the GBP/USD pair is currently trading at 1.2785. We continue to expect support to hold on moves approaching 1.2730 while now any upward push will likely meet resistance around 1.2810.


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 strengthened overnight against the US. Dollar on the back of soft US data releases which came in below the market's expectations. The EUR/USD pair hit a daily high of 1.1412 but retreated to the 1.1380 level. The high for the week was 1.1418.



On the release front today and in the EU we will see the release of Q3 Gross Domestic Product and in the US the Nonfarm Payroll report. The US economy is expected to have added last month 205K new jobs, while the unemployment rate is seen steady at 3.7%. Wages are foreseen up by 3.1% YoY.


From a technical perspective, the EUR/USD pair is currently trading at 1.1379. We continue to expect support to hold on moves approaching 1.1350 while now any upward push will likely meet resistance around 1.1420.


The Canadian dollar took a tumble to fall to a 1 month low of 0.7442 yesterday. The slide in the CAD comes on the back of the escalating trade-war between the United States and China, and the oil prices which have dropped in recent weeks. The Loonie which is backed by commodity crude oil is facing volatility on that end, as discussion of oil production cuts are still being argued.


Two macroeconomic releases that are expected to have a major impact on the dollar will be released just after midnight tonight. The statements will highlight employment change and the unemployment change for the previous month. Both are general indicators of consumer spending, which account for a majority of overall economic activity and are an important signal of economic health for the country.

The Canadian dollar opened at 0.7466 this morning.