Australian Dollar
Expected Range 0.7280 – 0.7430
The Australian dollar edged marginally higher throughout trade on Wednesday capitalising on a USD sell off. With very little macroeconomic data available the AUD touched intraday highs at 0.7401 as investors looked to take profit on USD positions while Aussie bulls defended key technical supports above 0.7330. The AUD has suffered a remarkable depreciation throughout the last fortnight following a softer than anticipated quarterly inflation report and subsequent RBA rate adjustment. Downside pressure will likely remain intact through the short term as inflation forecast remain flat and additional rate cuts appear likely. The RBA has seemingly adopted a more dovish tone since cutting rates and markets will be keenly attuned to macroeconomic indicators and central bank rhetoric that offer support to accommodative monetary policy. A consolidated break below support at 0.7330 and a move below the 200 moving average could foster further losses and a run toward 0.72 and the psychological 0.70.
New Zealand Dollar
Expected Range 0.6710 – 0.6910
The New Zealand dollar offered little to excite investors through trade on Wednesday edging marginally higher and breaking back through 0.68. The Kiwi touched intraday highs at 0.6845 following a general USD sell off and a somewhat neutral RBNZ Financial Stability report. The Central bank cited housing and dairy prices as markers for concern surrounding economic health while noting global economic growth remains stagnant and a drag on exports. Attentions today turn to us unemployment claims ahead of tomorrow’s key retail sales report. A strong read will underpin and justify the RBNZ’s shift to a more neutral policy outlook.
Great British Pound
Expected Range 1.9380 – 1.9680
The Great British Pound failed to break outside recent ranges as markets appeared content in monitoring positions throughout a session that proved to offer little in the way of macroeconomic indicators. Suggestions the upcoming Brexit vote could lead to a wider break up across the EU and revelations the UK has little in the way of a contingency plan in place should Britons elect to leave the EU forced Sterling toward intraday lows at 1.4397 before wider USD weakness and profit taking saw Cable recoup losses and close higher at 1.4450. Attentions now turn to the BoE monthly bank rate announcement and accompany statement, minutes and commentary. While markets are anticipating the MPC will maintain the current status quo they will be keenly attuned to any shift in the language that suggest a shift in monetary policy is possible.
Majors
Expected Range N/A
The U.S Dollar edged lower through trade on Wednesday, relinquishing gains and posting losses for the first time this week. With little macroeconomic data available to steer direction investors looked to take profit and consolidate gains after 7 days of steady advances. Markets appear wary in extending any upside USD rally while there remains a healthy scepticism surrounding Fed monetary policy and the path of U.S interest rates. Investors see the cloudy policy outlook as a drag on rallies and until a clearer picture or path is identified a meaningful bullish recovery will likely meet resistance. The Yen recovered some of the weeks earlier losses as the chatter surrounding possible market intervention subsided through Wednesday. Comments from key political and BoJ figures throughout the last week have stoked suggestions Japan will look to artificially weaken the JPY. The Yen has appreciated some 14% throughout the year thus far and is seemingly undercutting monetary policy attempts to revive the economy and stimulate growth. The suggestion of an intervention forced a JPY sell off and the USD/JPY rallied some 3.2 percent before Wednesday’s directional shift. Markets and investors will closely scrutinise any commentary that intimates an intervention is on the table but until a clear directive is offered we anticipate the Yen will find support on moves toward 110.00. Attentions now turn to U.S unemployment claims ahead of Friday’s all important retail sales and consumer sentiment reports. Poor prints could suggest the world’s largest economy is in a longer slump than initially expected and subsequently extend the timeline on any Fed policy change.