Australian Dollar
Expected Range 0.7580 – 0.7835
The Australian Dollar moved higher through trade on Monday recouping early losses and rallying strongly on the back of renewed risk appetite. The Aussie touched near 10 month highs overnight tapping 0.7759 as investors chased a higher yield on reports striking Kuwaiti Oil workers’ were offering short term support to oil prices as production slowed through Monday. The AUD found additional support in softening demand for the world’s base currency. Investors sold down USD positions as attentions again turned to expectations the Fed and FOMC will maintain their dovish policy stance through the short to medium term. Having broken resistance at 0.7725 the AUD could be poised for another breakout as volatility eases. With little in the way of technical resistance the Aussie could mount a run toward and through 0.78 as attentions turn to today’s RBA monetary policy meeting minutes. Affirmation the RBA will maintain its neutral policy stance could cement recent gains, however any indication the Central Bank is positioning itself for a shift toward looser monetary policy will likely induce a sell off.
New Zealand Dollar
Expected Range 0.6840 – 0.7070
The New Zealand Dollar rallied through trade on Monday bouncing through 0.69 and touching intraday highs at 0.6957 as investors demand for risk appreciated. The Kiwi followed commodity currencies higher on reports striking Kuwaiti oil workers would slow production and offer, at the very least, short term support to oil prices while OPEC negotiations to limit supply continue. The NZD found additional support as markets sold down USD positions. With volatility easing attentions again turned to a dovish Federal Reserve and expectations the FOMC will maintain a cautious approach to interest rate policy moving through the short term. Attentions today turn to the fortnightly Global Dairy Trade Auction. A strong showing could help cement recent gains and may signal a reversal in Dairy Prices.
Great British Pound
Expected Range 1.8325 – 1.8625
The Great British Pound rallied through trade on Monday buoyed by wider USD weakness. Cable climbed through 1.4250 to touch intraday highs at 1.4290 as investors attentions again turned to a Dovish FOMC. New York Fed President William Dudley affirmed the Fed’s cautious approach to interest rate policy in comments made at the opening of the Bank of New York’s Federal Reserve Conference. As volatility eases attentions turn to BoE Governor Carney for direction through trade on Tuesday.
Majors
Expected Range N/A
The Greenback softened against the majority of its major trading partners through trade on Monday as fallout from another failed OPEC negotiation dwindled and risk appetite renewed demand across commodity currencies. Investors looked to pare positions with volatility easing and attentions turning again to a Dovish USD and FOMC outlook. New York Fed President William Dudley affirmed the Fed’s cautious approach to interest rate policy suggesting that while domestic economic conditions are “mostly favourable” the threat of a wider global slowdown remains. Despite enjoying gains against the safe haven Japanese Yen the USD edged lower against the Euro, Pound and commodity driven units. Attentions this week turn to the ECB. With many market commentators suggesting the central bank has used up its arsenal of tools in a bid to deflate the 19 nation combined unit. Analysts are preparing for a relatively mundane market reaction that could promote further Euro upside should expectations for a dovish and cautious Federal Reserve continue.