Key Forex Afternoon Notes:
- Australia Westpac consumer sentiment 8% vs. 2.4% previously
- Japan bank holiday
- Australia home loans m/m 2.7% vs. 2.3%
Later:
- US Crude oil inventories
- US Federal budget balance
- New Zealand manufacturing index
The currency markets were quiet today with only Australia and New Zealand open for business. Tokyo remained closed on account of a bank holiday, which saw little movement during the Asian trading session. The Australian dollar eased from early session highs of 0.772 to dip towards a session low of 0.77095 before trimming its losses. The Kiwi Dollar also saw choppy trading as the NZDUSD managed to make a session high to 0.744 before dropping to lows of 0.737 levels to trim its losses.
The USDJPY was relatively trending after breaking out from its key support level near 119.145 yesterday. The pair looks poised to test back the 120 levels and looks bullish ahead of the US trading session open.
The European session was quiet with no major releases, but the major theme of the Greece crisis continued to plague the single currency, which was seen trading within a range with no clear direction. Ongoing negotiations with Greece saw the meeting head into a stalemate, with neither Germany nor Greece willing to blink. German finance minister Wolfgang Schaeuble told reporters yesterday that if Greece fails to accept the final loan of €7 billion with the conditions, it would be “over.” He also put to rest the rumors from yesterday about a possible 6-month extension.
Meanwhile, the British Sterling was the star performer gaining across the board. The Cable managed to break above the main support at 1.5285 to make a session high of 1.529 at the time of writing, with the possibility of extending its gains even higher. The bullish turnaround in the Sterling was seen largely in part as the markets pricing in a hawkish inflation report from the BoE due tomorrow, where the inflation letter from BoE’s Carney will also be revealed explaining why the BoE missed its inflation target of 2%. All said and done, the current miss in inflation estimates are likely to be short-lived as the BoE could possibly look beyond the current slump.
The US trading session does not have any major news releases the broad theme is likely to continue for the most part of the day. The Dollar index is currently looking to post second day of gains after a weak start on Monday. The trade weighted index was trading at 94.93 at the time of writing. Crude oil inventories report is also due later this evening which seems to be weighing in on the oil markets. WTI Crude oil was lower, for the most part, down near 49.69 support level. A break of this could see Crude head lower towards the next support at 47.81, but would still keep Crude oil technically bullish in the near term. A break below 47.81 could, however, shift the bias back to bearish sentiment. Read more about our Crude Oil technical analysis here.
