Profit taking pushes Greenback off multi month highs

AUD / USD

Expected Range: 0.7065 - 0.7250

The Australian dollar suffered wider selloffs through trade on Wednesday dipping below 0.72 and touching intraday lows at 0.7174. Having recouped losses suffered after Glenn Stevens’s reiterated inflation would remain the primary marker for future monetary policy moves investors appeared reluctant to extend the rally and looked to take profit. Having slipped below the 200 day moving average the AUD appears to have broken key technical supports with little in the way of it and a move toward 0.7065 and the psychological 0.70. With Resistance forming on moves above 0.7230 the Aussie appears to have entered a new trading band and we anticipate the currency to muddle along between 0.70 and 0.73 until further RBA policy guidance and Fed IR updates are proffered. Attentions today turn to quarterly Private Capex and key U.S macroeconomic indicators for directional impetus.  

NZD / USD

Expected Range: 0.6620 - 0.6820

The New Zealand dollar again struggled to break outside a tight trading band throughout Wednesday bouncing between session lows at 0.6735 and intraday highs at 0.6770. Investors appeared reluctant to push recent bounds ahead of today’s annual budget release and key U.S Fed/FOMC commentary and macroeconomic data sets. Having fallen to near 2 month lows the Kiwi seems well supported on moves below 0.6730 although a dour budget and soft economic outlook could push the unit lower and extend losses through 0.66. 

GBP / AUD

Expected Range: 2.0250 - 2.0650

The Great British Pound found renewed support advancing to near 5 month highs and breaching 1.47. Sterling rallied strongly backed by increasing speculation Britons will opt to remain within the European Union. The latest polls show a shift across key demographics with pensioners and conservatives leaning toward a “stay” vote and the remain camp extended its lead by 20 points with 58% of voters backing the pro-EU campaign. Buoyed by a bout of USD selling Cable touched intraday highs at 1.4727 as attentions turns to quarterly GDP estimates for macroeconomic direction. 

USD, EUR, JPY

The U.S Dollar edged marginally lower against the Euro through trade on Wednesday relinquishing gains as investors looked to profit on recent rallies. Having touched a ten week high at 1.1129 the Greenback came under selling pressure as investors jumped behind the 19 nation combined unit reluctant to maintain a longer run USD bull trend. Having rallied nearly 1.5% in the 2 weeks since mid-May investors appear cautious ahead of key U.S data sets. While recent macroeconomic indicators suggest the economy has rebounded from a sluggish first quarter and Fed officials have consistently spruiked the possibility of a June rate amendment there is still a gap between market expectations and the Fed’s monetary policy path. A level of pessimism still exist within the market given significant threats to wider global growth have not yet dissipated. Chinese growth concerns appear to be escalating again and the threat of political and economic turmoil following Britain’s Brexit referendum are likely to weigh on the minds of Fed officials. Touching intraday highs at 1.1166 the Euro found additional support in confirmation Eurozone Ministers had agreed a new tranche of Greek loans would be proffered. Attentions now turn to U.S Fed officials Bullard and Powell and U.S Core Durable Goods orders as key markers and indicators of possible monetary policy change.