Australian Dollar
Expected Range 0.7300 – 0.7450
The Australian dollar enjoyed marginal gains through trade on Tuesday as investors demand for risk returned for the first time since Friday’s Brexit vote. Markets appeared to pause and take stock on Tuesday opting to square off positions and take profit on recent runs to safe haven assets. The AUD advanced against the USD, CHF and JPY touching intraday highs at 0.7415 before a stronger than expected U.S first quarter GDP report prompted another run on the world’s base currency. With little of note on the domestic economic calendar to drive investor demand direction will again stem from risk appetite flows and continued Brexit fall out. We anticipate the AUD will struggle on moves through 0.7450 and approaches toward 0.75, while supports above 0.7300 remain intact ahead of next week’s RBA monetary policy meeting.
New Zealand Dollar
Expected Range 0.6920– 0.7120
The New Zealand dollar rallied through trade on Tuesday, taking advantage of renewed appetite for risk and advancing back through 0.70 U.S cents. Having suffered a heavy sell off in the wake of the Brexit decision investors appeared to take stock and profits on recent runs to haven assets ensuring the Kiwi advanced against the USD, CHF and JPY. With little macroeconomic data driving demand direction will continue to stem from wider risk flows as investors pick apart the implications of Friday’s Brexit vote.
Great British Pound
Expected Range 1.7850 – 1.8250
The Great British Pound moved marginally higher through trade on Tuesday recouping a small portion of the losses suffered in the wake of Fridays shock Brexit referendum outcome. Bouncing off 31 year lows the Pound touched intraday highs at 1.3419 before slipping back below 1.3400 to open this morning at 1.3320. Markets and investors appeared to pause for the first time since Friday and looked to bank some profits ahead of Key US GDP and inflation reports. The respite however is by no means a signal of a wider recovery as uncertainty surrounding UK economic and political prospects lingers with pessimistic estimates suggesting the immediate GBP sell off is perhaps just a precursor to continued downward correction over the coming 6-12 months.
Majors
Expected Range N/A
The U.S dollar enjoyed a mixed trading session Tuesday advancing against safe haven partners while retreating against the Euro, Sterling and riskier assets. Investors and markets appeared to take stock, pausing for the first time since Friday’s shock UK referendum outcome and subsequent Brexit from the EU. The Euro bounced off three and a half months lows at 1.0909 to touch intraday highs at 1.1108 before settling marginally lower. The Greenback found some support in stronger than anticipated first quarter GDP numbers as markets position themselves ahead of today’s all-important PCE Price Index report. The Fed’s preferred measure of inflation will be closely scrutinised by investors. Anything short of an overtly upbeat print will do little to dissuade analysts that a rate hike is all but off the table this year as Friday’s Brexit vote will force the Fed to again revaluate its current monetary policy path/platform. The rebound in demand for risk appears short term at present as investors and traders take stock and profits in the wake of the Brexit turmoil. Tuesdays moves by no means signals a definitive shift and end to the volatility of the last 2 days and uncertainty will continue to weigh on markets as the fallout from the UK drives direction and monetary policy speculation.