Australian Dollar
Expected Range 0.7630– 0.7830
The Australian Dollar touched a three month high through trade on Wednesday pushing through 0.77 to tap 0.7756. Despite a lack of domestic direction the AUD found support in renewed USD shortening and increased demand for a higher yield return. Buoyed by a stronger appetite for risk investors have taken advantage of the US Federal Reserve’s inability to follow through and deliver a second interest rate increase. As long as the differential in interest rates remains intact support for the Australian dollar should continue with resistance forming on moves toward 0.7835 and 0.79.
New Zealand Dollar
Expected Range 0.7180 – 0.7380
The New Zealand dollar rallied through trade on Wednesday buoyed by wider Greenback weakness. Touching intraday highs at 0.7265 investors seemed wary of extending the rally before the RBNZ rate and monetary policy statements. At time of writing the Central Bank, as largely expected, opted to cut the Overnight Cash Rate (OCR) by 25 basis points to 2.00% while promoting an extended period of accommodative monetary policy. Despite eating into the Kiwi’s yield advantage the NZD jumped through 0.73 in response to the RBNZ announcement. The cut was widely anticipated and investors rushed to buy the dip forcing a rally as attentions to Governor Wheeler and the banks accompanying statement for wider direction.
Great British Pound
Expected Range 1.6750 – 1.7050
The Great British Pounds precipitous sell off stalled through trade on Wednesday as investors jumped behind the beleaguered unit prompting support on moves below the psychological 1.30 handle. Having touched session lows at 1.2994 Sterling rallied, buoyed by USD shorts and a wider Greenback sell off. Touching intraday highs at 1.3093 profit taking then took hold and cable moved lower into the daily close. With direction being driven by monetary policy expectations and post Brexit macroeconomic performance attentions now turn to next Tuesday’s CPI inflation report and Wednesday’s labour market assessment as possible catalysts prompting a push nearer record lows at 1.2795.
Majors
Expected Range N/A
The U.S Dollar fell through trade on Wednesday as investors squared positions ahead of Fed Chair Janet Yellen’s August 26th address. With little macroeconomic data on hand to drive direction the market appears to be taking stock and reassessing expectations of future Fed Monetary policy. Softer non-farm productivity and weakening treasury yields have dampened demand for the world’s base currency and the Greenback has relinquished gains garnered in the wake of Friday’s upbeat labour market data. The USD moved through 101 JPY touching intraday lows at 100.98 while the Euro edged closed to 1.12 meeting session highs of 1.1190. The August 26th Federal Reserve Symposium looms as the next big ticket marker guiding analyst interest rate expectations with investors anticipating a hawkish lilt to the Fed Chair’s commentary. Should Yellen fail to deliver it will only highlight the Fed’s inability to follow through on tightening monetary policy and likely extend the formation of bearish channels and heighten demand for short positions. Attentions today turn to unemployment claims ahead of Friday’s core retail sales and consumer sentiment reports for direction into the weekend.