Australian Dollar
Expected Range 0.7520 – 0.7770
The Australian Dollar rallied strongly throughout trade on Tuesday advancing some 150 points on renewed demand for risk and extended Fed interest rate expectations. The AUD led a commodity currency rally as easing political uncertainty both domestically and internationally prompted increased demand for higher yielding assets and returns. The Aussie touched two month highs at 0.7658 before profit taking forced the rally to flatten out and the currency settled into the close. With little of note on the domestic economic calendar direction will again stem from risk flows with Chinese Trade Balance numbers providing some macroeconomic stimulus ahead of Thursday’s unemployment print.
New Zealand Dollar
Expected Range 0.7150 – 0.7350
The New Zealand dollar rallied through trade on Tuesday, buoyed by renewed demand for risk across commodity currencies. Advancing some 100 points the Kiwi touched intraday highs at 0.7322 before edging lower into the daily close. With little of note on today’s macroeconomic calendar direction will again likely stem from risk flows with Chinese Trade Balance numbers providing some macroeconomic guidance ahead of next week’s quarterly inflation print.
Great British Pound
Expected Range 1.7200 – 1.7600
The Great British Pound found support through trade on Tuesday following confirmation Theresa May, Britain’s Interior Minister, will replace David Cameron as Conservative Leader and Prime Minster today. The appointment has promoted renewed risk appetite as the political turmoil that followed the Brexit vote appears to be easing. Sterling rallied off 30 year lows touched last week and moved back through 1.30 hitting intraday day highs at 1.3295. Attentions today turn to Credit Conditions and risk flows for direction.
Majors
Expected Range N/A
Renewed appetite for risk continued to drive direction through trade on Tuesday prompting a Greenback rally and JPY sell off. The USD touched two week highs against it Japanese counterpart on news Prime Minister Shinzo Abe’s ruling coalition government secured re-election at the weekend. The result has prompted expectations of extended and increased stimulus from both the BoJ and Government with some suggestion new fiscal measures will be employed in a bid to stimulate a consumer driven recovery and growth. The Greenback moved through 104 to touch intraday highs at 105.01 before settling lower into the daily close. Additional USD support was fostered following comments from FOMC board Member James Bullard. Bullard suggested he expects the Brexit decision will have limited long term impact on U.S. Economic growth. The St Louis Fed President however did note that a prolonged period of accommodative monetary policy was appropriate and all but cancelled out a July rate adjustment. Fed Funds Futures fell to just 4% for July with the majority of analyst and traders pushing rate hike expectations into 2017. Attentions today will likely remain with risk trends as the macroeconomic calendar offers little to spark direction.