Greenback recovery stalls despite strong data

AUD / USD

Expected Range: 0.7650 – 0.7750

The Australian Dollar touched a low of 0.7635 overnight against the U.S Dollar on the back of stronger than expected US macroeconomic data. A raft of realises saw the Aussie retreat as US Retail Sales, Inflation data and Empire State Manufacturing beat expectations. As Fed Chair Janet Yellen began her second day testifying before the House of Financial Services Committee markets shifted focus and saw investors take profit driving the Aussie higher and breaking key psychological resistance levels of 77c and currently changing hands at 0.7717 at the time of writing. Local economic data today sees the Employment Change and Unemployment rate, economists expect around 10k jobs to have been added to the market with the Unemployment rate holding at 5.8%

NZD / USD

Expected Range: 0.7150 – 0.7300

The New Zealand Dollar against its US counterpart moved pretty much in line with AUD/USD showing that both pairs took direction from offshore events. The NZD/USD initially dipped from 0.7195 to 0.7145 as the data sparked speculation that the Federal Reserve may increase interest rates as early as March. The Fed commented that they will “evaluate whether employment and inflation are continuing to evolve in line with these expectations” and that “further adjustment of the federal funds rate would likely be appropriate”. The commodity based currency rallied with profit takers jumping in driving the Kiwi to an overnight high of 0.7228 and currently trading at 0.7220 at the time of writing. 

GBP / AUD

Expected Range: 1.6100 – 1.6300

The Great British Pound ended Wednesday marginally lower having recouped losses suffered throughout early European trade. A softer than anticipated expansion of wages and a flat unemployment print set Sterling on a downward trajectory breaking through 1.2450 before the selloff was compounded by upbeat U.S CPI and Retail Sales data that drove the Greenback toward 1 month highs. Touching intraday lows at 1.2390 the Pound then found support as investors looked to sell into the USD rally and took short term profits. Fed Chair Janet Yellen offered little additional insight into the timing of future rate hikes when she addressed the senate banking committee for a 2nd consecutive day, hinting rate hikes would be dependent on the impact of President trumps fiscal growth policies. Rallying back through 1.2450 to touch 1.2480 the Pound opens this morning at 1.2456 as attentions turn to Friday’s Retail Sales report as the next macroeconomic marker for direction. 

USD, EUR, JPY

On the back of strong US data overnight the Greenback advanced against a group of key currency counterparts. US CPI for the month of January was up 0.6%, with the core data up 0.3%. The biggest headline gain since February 2013, while the core gain is the largest since August 2016. U.S. retail sales rose 0.4% for the month of January which was also a very strong report. Finally, U.S. Empire State manufacturing index for the month of February was up 12.2 points to 18.7. All eyes will now be on the March FOMC meeting where a rate hike is definitely in the cards. Looking ahead today and all attentions now turn to US Building Permits, Housing Starts and Unemployment Claims all for the month of January.