FX market outlook

FX market outlook

Posted on Tuesday, July 11 2017 at 8:35 am GMT+0000

Aussie gains on strong business conditions; dollar strength unfolds; oil up slightly

As the Asian markets were about to close for the day, the dollar continued strengthening against the yen and the euro. The Australian dollar rose for the day on strong business conditions, while pressure on oil eased, as commodity prices showed some gains.

The Australian dollar was among the rare gainers against the greenback during the Asian trading session. Supported by the newest data pointing to strong business conditions, the aussie climbed to $0.7623 ahead of the European open. Australian business conditions climbed to its highest level since early 2008, with NAB’s index of business conditions rising 4 points to 15 in June and business confidence adding 1 point to 9. Also, traders were monitoring Australian home-loan approvals for May that were released today. At 1% gain, month-on-month, the figure rose for the first since January, however it missed analyst expectations of a 1.5% expansion.

The kiwi slid against the dollar half a percent to $0.7234 ahead of European trading. Annual expansion of electronic card retail sales tempered in June (gain of 4.5% vs. 5.2% in May), which pushed the kiwi lower and the currency continued trending down since.

The dollar opened firmer against the yen and subsequently followed a steady uptrend during the Asian trading hours. Dollar/yen was last trading at the 114.39 level. Hawkish comments by Federal Open Market Committee member John Williams gave a boost to the dollar in late Asian session. He still expects the Fed to raise interest rates once more this year and to start unwinding its balance sheet in the next few months. Federal Reserve Chair Janet Yellen’s testimony in front of the Senate tomorrow and on Thursday will likely be the main focus of dollar traders.

The euro was down a tenth of a percent against the greenback ahead of the European session. Euro/dollar was last trading at 1.1386.

Sterling was under pressure against the dollar for most of the Asian trading hours, however the currency found support and gained just as European markets were about to open. Pound/dollar was up 0.08%, last trading at 1.2886.

Crude oil prices extended their overnight gains, even as increased drilling activity in the US and uncertainty over Libyan and Nigerian production cuts clouded the future supply outlook. WTI was last trading at $44.66 a barrel and Brent was at $47.13.

Gold edged lower during the Asian session on the firmer dollar as the market awaits cues on the path of interest rate hikes in the US ahead of the testimony by Janet Yellen. The precious metal was last trading at $1,210.22 an ounce.