Risk off trade hampers AUD rebound

AUD / USD

Expected Range: 0.6980 - 0.7130

After last week’s volatility the Australian dollar suffered a topsy turvy start to what promised to be a quieter week ahead. The Aussie bounced about a near one cent range as markets adjusted positions following Friday’s correction and risk appetite trends. Edging upward in early trade the AUD touched session highs at 0.7128 before tumbling oil prices and risk off trade took hold forcing the currency back through 0.71 to touch intraday lows at 0.7049. With Chinese New Year Celebrations limiting liquidity and little fundamental data on hand to govern direction the Australian dollar looks to sentiment and commodity prices for bearing through Tuesday. Attentions then turn to Fed Chair Janet Yellen as she testifies on Monetary Policy platforms to Congress. A hawkish Yellen could spell a recovery for the Greenback as market interest rate expectations wane.

NZD / USD

Expected Range: 0.6550 - 0.6680

The New Zealand dollar offered very little to excite investors through trade on Monday as New Zealanders enjoyed an extended long weekend in observance of Waitangi Day. Maintaining a tight 30 point range for much of the domestic session the NZD touch intraday highs at 0.6659 before moving lower as waning risk appetite led a sell off and move toward haven assets. Having found support on moves toward 0.66 the Kiwi opens this morning buying 0.6618 U.S cents as attentions turn again to trader sentiment for direction through Tuesday.

GBP / AUD

Expected Range: 2.0250 - 2.0550

The Great British Pound, having met resistance on moves approaching 1.4550, gave up ground, dropping to touch intraday lows at 1.4348. Sterling followed stocks and high-yield bonds lower through trade on Monday as investors scrambled toward haven assets in a session dominated by risk off trade. With little fundamental data available to steer direction the Pound remains vulnerable to risk flows as attentions turn to key U.S monetary policy testimony when Fed Chair Janet Yellen addresses Congress on Wednesday. A hawkish Yellen would highlight the gulf forming in monetary policy and signal a deeper GBP correction and move back toward 1.4100.

USD, EUR, JPY

The U.S Dollar relinquished gains earned in the aftermath of Friday’s upbeat wage data and declining unemployment rate following risk assets lower through trade on Monday. Stocks, high yield bonds and commodities all fell as risk appetite evaporated from the market. Oil led the commodities sell off as both Brent and U.S crude tumbled on hopes an agreement capping production between OPEC and non OPEC oil producers faded. The Greenback fell to 15 month lows against the Yen moving through 116.00 and 115.50. Having broken a point of key technical resistance USD/JPY, a maker for trader sentiment, is on the cusp of deeper losses with a move through 115.0 toward 114.00 a possibility should sentiment continue to sour. With little macroeconomic/fundamental data on hand to push direction and Chinese New Year celebrations limiting liquidity attentions turn to Fed Chair Janet Yellen as she testifies to Congress on Monetary Policy through Wednesday and Thursday. An upbeat Yellen could help fuel optimism and support calls for multiple interest rate amendments throughout the year however a dovish undertone will scupper any short term bullish upside. 

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