Australian Dollar:
The Australian dollar offered little throughout the domestic trading session struggling to break higher as falling commodity prices and an advancing Greenback dampened demand for resource driven currencies. Edging lower in overnight trade the AUD broke below 0.77 touching 0.7690 before technical supports helped push the embattled unit higher. Since touching 6 months highs in early May on fears of a prolonged period of ultra-loose U.S monetary policy the Aussie has suffered a dramatic sell off as investors again throw support behind the world’s base currency. Expectations the Federal Reserve will raise rates before the end of the year ending the cycle of record low interest returns have fuelled Greenback Bulls and forced the USD higher. With resistance forming on advances above 0.7840 the potential to test year to date lows at 0.7530 may come into play as attentions turn to Private Capex numbers for domestic direction.
We expect a range today of 0.7630 – 0.7840
New Zealand Dollar:
Much like its Australian counterpart the NZD has suffered at the hands of a bullocking USD, touching fresh lows at 0.7207 throughout trade on Wednesday. With little domestic data available to drive direction the Kiwi took its cues from offshore stimuli struggling to breach resistance levels forming on approaches to 0.7270. The NZD has endured a steep sell off throughout May as monetary policy expectations and adjustments in central bank outlooks have forced investors to reassess positions and yield opportunities. Attentions now turn to ANZ business confidence Friday for direction into the weekend.
We expect a range today of 0.7205 – 0.7350
Great British Pound:
The Great British Pound was forced lower through trade on Wednesday as investors continued to support the USD on expectations the Federal Reserve will raise rates before years end. A flat domestic calendar offered little support and Cable broke below 1.54 for the first time since the May 7 elections. Comments from her Majesty the Queen hinting at changes in legislation to bring forward the in/out European Union Referendum were largely ignored and has little impact on Sterling fortunes. Attentions now turn to GDP estimates and quarterly Business investment reports for direction through Thursday.
Majors:
The U.S Dollar advance continued throughout trade on Wednesday as the world’s base currency strengthened against most major counterparts breaking above 124.00 and making fresh 8 year highs against the Japanese Yen. Investors continue to pile support behind the Greenback as improved data sets and comments from key central bankers suggest the recovery from a listless first quarter has begun, heightening expectations surrounding the timing of a Federal Reserve rate adjustment. The Dollar found additional support in automatic sell orders as USD/JPY stop losses triggered forcing the Yen lower still. The Euro was perhaps one of the few counterparties to offer resistance to the Greenbacks upward push bouncing off 1 month lows on rumours Greece and her creditors were in the midst of drafting an agreement that would unlock funding for the cash strapped nation. Having touched intraday lows of 1.0815 the 19 nation combined currency rallied to touch 1.0929 before easing lower. Despite the a swift rebuff from European officials denying claims a debt deal had been reached traders willingness to buy the rumour rather than sell the fact helped cement the daily gain. Attentions now turn to Unemployment Claims and Pending Home Sales data ahead of key preliminary GDP numbers Friday as investors seek stronger data to support the Bullish trend.
Data releases:
AUD: Private Capital Expenditure q/q
NZD: No Data
JPY: Retail Sales y/y
GBP: Second Estimate GDP q/q, Prelim Business Investment q/q, BBA Mortgage Approvals and Index of Services.
EUR: Italian 10 Year Bond Auction
USD: Unemployment Claims and Pending Home Sales m/m