Aussie steady in face of thin trading volumes

Australian Dollar

Expected Range 0.7550– 0.7650

Breaking to the downside through the 0.76 handle yesterday the Australian dollar remained in a docile mood when valued against its US Counterpart intraday. Playing only a secondary role a seasonally adjusted estimate for total construction work done in the June quarter fell by 3.7 percent to $47.4M. Whilst the ASX edged higher off the back decent earnings the support struggled to flow through to currency markets. Opening in a marginally stronger position at a rate of 0.7612 US Dollar moves will play an important role in governing direction through to the end of this week.

New Zealand Dollar

Expected Range 0.7210 – 0.7350

The New Zealand dollar opens this morning having broken back through the 0.73 handle overnight following a uptick in milk price forecasts. Dairy giant Fonterra boosted 2016/17 milk price forecasts by 50cents citing improvements in global pricing and a rebalancing of supply and demand. Pushing through to touch intraday highs at 0.7334 the Kiwi buys 0.7310 at time of writing. Attentions now turn to U.S Fed president Janet Yellen and her monetary policy address as the single most important directional driver leading into weeks end.

Great British Pound

Expected Range 1.7120 – 1.7520

The Great British Pound moved against wider market flows and advanced against the U.S dollar moving through 1.32 to touch intraday highs at 1.3271. Despite a marginal decline in mortgage approvals Sterling found continued support following last week’s stronger than anticipated inflation and labour market data readings. The strong prints bolstered market confidence and allayed fears of a post Brexit slowdown, tempering expectations for additional stimulus and deeper interest rate reductions. Attentions into the end of the week will be drawn to Friday’s second quarter GDP estimates and the Jackson Hole Symposium on Monetary Policy with near term upside for cable in play. 

Majors

Expected Range N/A

The U.S Dollar rallied through trade on Wednesday boosted by a stable existing home sales print. Despite a marginal decline in home sales, data showed the price of houses rose through July and added to Tuesday’s upbeat new home sales report where sales surged to a near 9 year high. The Greenback climbed against both the Euro and Yen moving back through 1.1250 and 100.50 respectively. While trading remained thin gains were capped as investors were reluctant to extend rallies ahead of the Jackson Hole Symposium of Central Bankers and Janet Yellen’s much anticipated address. The market is poised to break outside trading bands with investors raising expectations Yellen will deliver a bullish assessment of economic conditions and adopt a more aggressive stance. Any insight into future policy plans will be hugely influential in directing U.S dollar moves. A shift away from her usually dovish rhetoric and measured commentary could help bolster USD demand and see the world’s base currency recoup losses suffered in the aftermath of the Fed’s and FOMC’s last policy sitting.