Australian dollar declines as trade war negotiations delayed

AUD

The Australian dollar eased overnight after failing to break through 71 US cents on open yesterday morning and overall down 0.4% for the day. The AUD/USD dropped off during the Asian session as mixed Chinese economic data pulled commodity-based currencies lower. Chinese Industrial Production grew at 5.3% in the first two months this year, albeit at its slowest pace in 17 years. Retail Sales were on par with previous reading as the unemployment rate in China grew to 5.3%.

News of a further delay in trade negotiations between United States and China did no favours for the local currency with reports that meetings might not take place now till April at the earliest. Intraday lows were seen at 0.7044 before a twenty-pip recovery was seen during North American trade.

From a technical perspective, the AUD/USD pair is currently trading at 0.7069. We continue to expect support to hold onto moves approaching 0.7000 while any upward push will likely meet resistance around 0.7100.

AUD / NZD

Expected Range: 1.0300 – 1.0400

The New Zealand dollar is weaker this morning when valued against the Greenback. The US dollar gained on Thursday for the first time in a week on the back of positive risk sentiment. US equities have extended their gains from earlier this week and are back testing the highs this year. The NZD is down 0.2% over the past 24 hours.

On the data front today in NZ we will see the release of both Business NZ Manufacturing Index and monthly Visitor Arrivals.

From a technical perspective, the NZD/USD pair is currently trading at 0.6833. We continue to expect support to hold on moves approaching 0.6800 while now any upward push will likely meet resistance around 0.6870.

GBP / AUD

Expected Range: 1.8500 – 1.9000

The Pound is weaker this morning when valued against the Greenback. The Pound retreated on Thursday as investors prepared for Prime Minister Theresa May to try again to win approval for her Brexit deal. The main motion in delaying Brexit was approved by 412 to 202 votes, with the Parliament now meeting again next March 20.

There are no macroeconomic releases scheduled in the UK this Friday.

From a technical perspective, the GBP/USD pair is currently trading at 1.3257. We continue to expect support to hold on moves approaching 1.3185 while now any upward push will likely meet resistance around 1.3250.

AUD / USD

Expected Range: 0.7000 – 0.7100

Demand for the worlds reserve currency accelerated on Thursday following the news that US President Trump and Chinese President Xi Jinping agreed to push back their trade meeting to next month. The US Dollar Index bounced off lows of 96.40 however has failed to break through resistance at 96.80.

On the data front we saw US export and import prices beat monthly expectations at 0.6% in February whilst US new home sales disappointed in January, yielding a 6.9% fall as the US government shutdown and market volatility hurt sales.

To finish out the week traders will be looking to Friday’s Industrial Production numbers for February and the Michigan consumer sentiment index for March. As mentioned above, initial resistance for the USD index is at 96.80 however moves past this level will meet further resistance at 96.89. We see 96.39 as a key support level on the downside and if breached, we could see falls to the Feb 28 low of 95.82.

AUD / EUR

Expected Range: 0.6200 – 0.6300

Euro pulled off from weekly highs overnight as Brexit voting dominated headlines during the European trade session. Falling from open at 1.1330, the EUR/USD saw little price action, stabilising above the 1.1300 handle.

Final German Inflation figures in February increased 0.4% monthly but was up 1.5% in February 2019 compared to the same period last year, energy prices were the main catalyst for the increase in yearly numbers. With inflation figures well below target levels of 2.0%, the ECB is in no rush to increase intertest rates following their more dovish stance in last week’s monetary policy statement.

The EUR/USD opens this morning at 1.1305 with final CPI figures for the European Union on the agenda this evening.

AUD / CAD

Expected Range: 0.9360 – 0.9480

Thursday saw the CAD weaken against the Greenback as the domestic unit was weighed down by weaker than expected data out of China and further uncertainty regarding US-China trade talks. This saw the CAD trade 0.2% lower against the USD to trade at 1.3323.

Oil prices still managed to rise 0.6% despite the trade talks and Chinese data which aided the Loonie. With no data due out of the domestic economy for the rest of the week, Friday should see the CAD take its cues from offshore releases, oil prices and risk sentiment more broadly.

We see initial resistance at 1.3356 before 1.3430 whilst on the downside the CAD seems relatively well supported at 1.3288 before the key psychological handle of 1.3200.