FX market outlookPosted on Friday, July 21 2017 at 8:12 am GMT+0000
Aussie tumbles on Deputy Governor’s dovish speech; US dollar weak on political woes
The Australian dollar tumbled amid a dovish speech by Reserve Bank of Australia Deputy Governor Guy Debelle. The US dollar remained under pressure against most majors following the plunge yesterday when news broke out about expansion of an investigation into Trump’s links with Russia.
The aussie fell to $0.7907 during Asian trading as the RBA Deputy Governor said that no importance should be given to the board’s discussion around the neutral rate and that it doesn’t imply monetary policy tightening. Earlier in the week, investors had understood that a potential tightening of the RBA’s monetary policy was coming, following the release of the central bank’s minutes. This had sent the aussie near the $0.80 level. Governor Philip Lowe is due to speak next week.
By contrast, New Zealand finance Minister Steven Joyce said he wasn’t worried about the strength of the nation’s currency as it reflects strong economic fundamentals and equally robust exports. Kiwi/dollar hit a fresh 10-month high to last trade at 0.7425 in the pre-European session.
The US dollar returned to its lowest in almost a year as investors digested yet another probe into Trump’s links with Russia. US special counsel Robert Mueller said yesterday that he was expanding his investigation of President Donald Trump to examine his financial dealings. Dollar/yen continued weakening during the Asian session to last trade at 111.83.
The euro continued strengthening following yesterday’s boost when it initially hit a 14-month high and shortly after climbed to a 23-month high. European Central Bank President Mario Draghi’s speech sent the euro to $1.1575, while the news about yet another investigation into Trump’s activities with Russia pushed the euro to an intra-day high of $1.1657. Today the eurozone currency continued firming to last trade at 1.1650 ahead of the European session.
During Asian trading, sterling recorded small gains after a week of losses against the greenback. Despite yesterday’s upbeat retail sales figure, the pound was negatively impacted by political woes around Brexit. Pound/dollar closed yesterday at 1.2971, to last trade today at 1.2985.
The Canadian dollar was up during Asian trading ahead of the key inflation and retail sales data today. Dollar/loonie was down at 1.2577 ahead of the European open. Economists are forecasting a gain of 0.2% in Canadian retail sales in May. The results of these data sets will likely be closely monitored by loonie traders.
Oil prices were broadly steady during Asian trading and ahead of the US Baker Hughes oil rig count data later in the day. Last week a slowdown in the rigs count boosted oil prices. WTI was last trading at $46.92 a barrel while Brent was at $49.31.
Gold continued building on late-last night gains during the Asian session. The precious metal was up 0.30% to last trade at $1,247.50 an ounce.