US Dollar moves towards 4-week high

Australian Dollar:

The Australian dollar struggled to maintain its edge when valued against its US Counterpart last week, a theme which prevailed once again on Friday. Trading to a low of 0.7810 when valued against the Greenback, on par economic performance from the world’s largest economy mixed with signals from the US Federal Reserve that policy makers still intend to raise interest rate before years end, has led to a period of consolidation for the US dollar. Opening weaker this morning at a rate of 0.7824 immediate resistance levels at 0.7850 appear the Aussies next major hurdle as US markets remain closed this evening for the Memorial Day extended weekend.

• We expect a range today of 0.7780 – 0.7880

New Zealand Dollar:

Trading to a low of 0.7297 when valued against its US Counterpart late last week the New Zealand dollar has been weighed down by a resurgent US dollar which touched an almost four week high when measured against a basket of major currencies last week.  Whilst domestic drivers still appear few and far between, recent moves suggest we have seen the end to the broad based USD sell off which initially began back in mid- March. Opening weaker this morning buying 73 US Cents, monthly trade balance figures which are scheduled for release tomorrow are now firmly in investors sights.  

• We expect a range today of 0.7250 – 0.7350

Great British Pound:

The Great British Pound has been sold aggressively when valued against the US dollar moving from an earlier high of 1.5690 to a low of 1.5459 on Friday following a statement from the Bank of England which confirmed that a research paper was underway to assess the implications of a possible British exit from the European Union. Whilst substantial water would still need flow under the bridge, business leaders would also need to identify any negative consequences to export channels and external linkages. In currency moves on Friday the Sterling moved lower against the Greenback (1.5479), the Aussie (1.9773) and the Kiwi (2.1202).

• We expect a range today of 1.9720- 1.9830

Majors:

Triggering a notable move higher and certainly bumping up expectations which surround the trajectory and value of the Greenback on Friday, US Federal Reserve Chair Janet Yellen commented that the US remains on track for a rate increase this year. Squashing dovish views which had previously looked towards January as the first hike, investors have since showed a renewed willingness to jump back on the strong US dollar, pushing it to a four week high. In further good news for the Greenback on Friday, core inflation, which strips out volatile items, surpassed expectations, advancing 0.3 percent, its largest jump since Jan 13. In other developments the EUR slumped to a low of 1.1002 versus the Greenback (well off its weekly high of 1.1448), following pledges to bring forward asset purchases in line with the seasonal shortages expected over the coming months whilst ECB President Mario Draghi on Friday called for improved unity across EU nations, encouraging members to use wisely the time stimulus has bought them.  In what’s shaping up as a quieter week, macro developments from the US will once again be closely scrutinized.

Data releases

• AUD: No data today
• NZD: Trade Balance  
• JPY: Trade Balance  
• GBP: Bank Holiday
• EUR: French and German Bank Holiday  
• USD: Bank Holiday