U.S Dollar edges higher again

AUD / USD

Expected Range:0.7510 – 0.7640

The Australian dollar suffered heavy selling through trade on Thursday as a rapacious USD advanced across the board. Plunging through key technical resistance at 0.7650 the Aussie ran through 0.76 US cents to touch overnight lows at 0.7558. Buoyed by an uptick in expectations of near term monetary policy activity the USD enjoyed strong gains forcing the AUD lower under threat of a narrowing yield gap. With investors largely anticipating a period of stable or neutral RBA interest rate policy talk of a possible March Federal Reserve rate hike saw investors shift holdings into the world’s base currency. Recent U.S data sets have been largely positive and commentary from the Fed has brought a rate hike sharply back into focus with CME’s Fedwatch tool now pricing in a 78% chance of an upward amendment on March 16, up from just 35% probability on Wednesday. Attentions now turn to Fed Chair Janet Yellen as she assess U.S economic outlook in Chicago. Markets will be keenly attuned for any rhetoric that suggest a hike is imminent leaving the AUD open to a move toward and below support at 0.7490/0.75.

 

NZD / USD

Expected Range: 0.6960 – 0.7180

Risk appetite dipped overnight as markets continue to price in a potential interest rate hike in March by the Federal Reserve. The New Zealand dollar was one of the worst performing currencies overnight seeing 7-week lows as further Fed Governors were in support of tightening monetary policy overnight. The sell off on Kiwi started within the domestic session testing support at 0.7100 before seeing an eventual low of 0.7050 against the greenback in early morning trading. Domestically we look to ANZ commodity price index figures this morning. All eyes turn to Janet Yellens speech in Chicago tomorrow morning for further clues on economic projections for the coming year. The New Zealand dollar opens this morning at 0.7065 against the greenback and lower against the Australian Dollar 0.9325.

 

GBP / AUD

Expected Range: 1.6030 – 1.6240

The Great British Pound is weaker today when valued against its US counterpart on the back of continued Brexit fears and mixed overnight UK data prints. The Sterling slipped to a six-week low of 1.2242 against the US dollar in early trade on Thursday after UK's construction PMI for the month of February rose to 52.5 from 52.2. However, the result was mixed as new orders fell. Following from Wednesday weaker-than-expected figures from Manufacturing PMI the data suggests Britain’s economy is starting to slow showing cause for uncertainty. Attentions will now turn to today’s release of Services PMI for the month of February which are expected to fall from 54.5 to 54.2 from the previous month. The GBP/USD pair is currently at 1.2268, down -0.18% on the day, we now expect support to hold on moves approaching 1.2225 while any upward push will likely meet resistance around 1.2300.

 

USD, EUR, JPY

A combination of hawkish comments from the Fed and Inflation in Europe increasing the EUR/USD has dragged lower touching levels of 1.0495. Fed Governor Powell said overnight that “the case for a rate increase in March has come together” with markets now pricing in a 92% chance of a hike this month. Over in Europe, the Inflation figure was the highest recorded in four years of 2% for the month of February. With core inflation still being below target and the ECB expected to make no changes to their current monetary policy EUR/USD could start to feel the pressure.  Also supporting the Greenback was the lowest number since 1973 of US residents filing for jobless claims, the number of claims for the month ending February 25th edged lower from 242k to 223k which continues to show strength in the labour market. Three more Fed members will speak today as well as the Fed Chair Yellen, expect to see the Dollar well supported as we head into the weekend.