Upbeat Fed Statement, US Dollar supportive

Australian Dollar:

Amid improved liquidity and sentiment the Australian dollar has done well to maintain its value close to the 73 US Cents mark overnight. Holding ground versus the US dollar whose stocks were bolstered following comments from Fed Chair Janet Yellen, US policy makers have left the door open for a rate hike in September. In a move which would see the yield attractiveness of the Aussie dollar suffer, those calling for a lower domestic currency over the medium to longer-term maintain a view that US economic fundamentals will be broadly supportive of steady growth and ultimately higher rates. The Australian dollar opens in a familiar position this morning as it buys 72.91 US Cents.

We expect a range today of 0.7250 – 0.7340

New Zealand Dollar:

The New Zealand dollar got off to a flying start yesterday after RBNZ Governor Graeme Wheeler said that while further monetary easing is likely, the economy currently isn’t weak enough to warrant large reductions in the underlying benchmark rate. Spurring the Kiwi to an early morning high of 0.6738 when valued against its US Counterpart, gains over the past 24 hours have been broadly limited following some notably upbeat rhetoric from the US Federal Reserve. During a week dominated by monetary policy chatter the US growth story will remain front and centre this evening ahead of an advanced GDP read. This morning the Kiwi opens steady at a rate of 0.6665.

We expect a range today of 0.6620 – 0.6720

Great British Pound:

The Great British Pound has struggled to hold onto the 1.5600 mark when valued against its US Counterpart overnight giving up a portion of its gains following Monday’s positive GDP result. With the economic calendar since throwing up very little the Sterling has struggled in the face of a stronger Greenback as the attention of investors shifted towards US interest rates and more importantly the specific timing of a rate hike, something which hasn’t transpired since 2006. Opening lower against the US dollar this morning at a rate of 1.5596, the Sterling is stronger against both the Aussie (2.1386) and the Kiwi (2.3396).

We expect a range today of 2.1320 – 2.1450


The Dollar Index, a measure of the Greenback against a basket of currencies rose overnight following an upbeat statement from the US Federal Reserve. Stating that the housing and labour markets have improved, evidence of slackness within the labour market have diminished as the economy moves towards a level of full employment. In a result which would support the Feds view, investors look towards this evenings advanced quarterly GDP print which is expected to reveal an economic expansion of 2.5 percent at an annualised rate. With the FOMC next scheduled to meet on September 16, the possibility of rate hike, remains intact, a view sufficient to support USD long positions for the time being.  Opening stronger across the board the US dollar is higher when valued against both the Yen (1.2395) and the Euro (1.0981).

Data releases

AUD: RBA Gov Stevens Speaks, Building Approvals m/m  

NZD: No data today    

JPY: No data today     

GBP: BOE Carney Speaks  

EUR: Spanish Flash CPI y/y, Spanish Flash GDP q/q, German unemployment change

USD: Advance GDP q/q, Goods Trade Balance, Unemployment Claims   

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