Political uncertainty as Britain set to invoke Article 50
|AUD / USD
Expected Range: 0.7570 - 0.7670
The Australian dollar drifted lower in the local session yesterday testing key resistance levels late in the afternoon. Seeing an intraday high of 0.7630 we saw the dollar decline to an eventual low of 0.7590 to start the European session. While the US dollar index firmed higher, the Trump trade continues to be questioned as markets await further news on policy. The Australian dollar reversed all losses in overnight trading seeing an eventual high of 0.7655 supported by a rally on oil and rebound in iron ore prices after several days of losses. The Australian dollar opens at 0.7630 this morning.
NZD / USD
Expected Range: 0.6950 - 0.7050
The New Zealand dollar edged marginally lower through trade on Tuesday touching intraday lows at 0.7008. With little domestic data on hand to steer investors the Kiwi was at the mercy of wider USD sentiment and currency flows. The Greenback advanced across the board while the NZD found support on moves approaching the 0.70 handle. Despite broader USD weakness of late the Kiwi failed to extend upside momentum and the recent sell off suggests the door may be open to revisit lows approaching 0.68. As the carry trades attractiveness diminishes the demand for the Kiwi and its yield advantage narrows with investors still extending USD longs on bets the Fed will raise rates twice more this year. Attentions today turn to the UK and Britain’s submission of Article 50.
GBP / AUD
Expected Range: 1.6175 - 1.6575
The Great British Pound tested topside resistance of 1.2600 against it US counterpart heading into the European session yesterday. The Sterling was then battered on a combination of higher US consumer confidence level and markets positioning themselves ahead of Article 50 official trigger date this evening. This will begin a two-year process of the UK preparing their exit from the European Union. The Cable cross started its decline from its highs of 1.2600 to end the North American session at eventual lows of 1.2440. The Great British Pound opens lower against the Australian Dollar (1.6325) and New Zealand Dollar (1.7760).
USD, EUR, JPY
The U.S Dollar advanced through trade on Tuesday reversing the recent downward trend in the face of wider political uncertainty and an uptick in key macroeconomic indicators. Buoyed by improvements in consumer confidence and supported by commentary from key Fed Officials the Dollar advanced across the board. Consumer confidence touched 16 year highs while Fed Vice Chair Stanley Fischer Bank of Dallas President Robert Kaplan both supported an additional two hikes throughout the year widening the Greenback’s yield advantage over the Euro and Yen while narrowing the Gap to high yielding emerging markets. The Dollar touched intraday highs at 111.20 JPY while the Euro fell sharply touching intraday lows at 1.0799. Market participants looked to short the 19 nation combined unit as political uncertainty escalates ahead of Britain’s admission of Article 50 and the commencement of Brexit negotiations.
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