Speculation abounds on whether the RBNZ will be the first to hike rates, this helped the NZD to rise to 1 year highs versus the Aussie dollar.
Michael Moran Mostly stronger than expected US inflation data lifted bond yields and the Greenback. The week ahead sees the first of the major central banks, the Reserve Bank of New Zealand meet on policy.
Every yield tells a story. Last week saw bond yields drive the currency markets. The benchmark 10-year US bond yield gradually climbed from 1.22% (6 August) to 1.36% (12 August) retreating to close at 1.28% on Friday (13 August).
The Dollar Index (USD/DXY) a measure of the Greenback against a basket of 6 major currencies slid to 92.53 on Friday from 93.07 a week ago. US Federal Reserve officials continued their reluctance to talk formally about bond tapering.
Meantime the rise in global coronavirus cases spurred by the Delta variant remained uncertain. Signs of a slowdown in parts of the United States and Europe were offset by rising new infections in much of Asia and Africa.
Not much net change at the close of trade but the weekly ranges were wide and choppy providing trading opportunities. As we head into September, and the northern hemisphere summer ends, things should pick up.
EUR/USD – The shared currency finished the week higher after US bond yields slid. The Euro settled at 1.1795 in late New York on Friday from its opening at 1.1735. A week ago, EUR/USD was at 1.1762. Weekly low for the shared currency was at 1.1706 (12 August) while the weekly high recorded was 1.1833 (08 August).
USD/JPY – This currency pair most closely mirrored the moves in the US 10-year bond yield. That’s because historically Japan’s 10-year JGB year hardly moves. It has ranged between 0.00% to 0.10% since April. The US 10-year bond yield by contrast has moved between 1.62% (April) to 1.28% Friday. USD/JPY closed at 109.60 on Friday, down 0.78% from its 110.43 open. Weekly high traded was 110.80 on Thursday (13 Aug). The weekly low trade recorded was the overnight low at 109.54.
GBP/USD – Sterling settled higher against the overall weaker Greenback by the end of the week to 1.3868 on Friday. The British Pound opened at 1.3807 following the release of weaker UK Manufacturing and Industrial Production data in June from the previous month. GBP/USD slumped to 1.3791 Friday night, the weekly low recorded. Weekly high for GBP/USD was at 1.3933 (06 Aug).
USD/CHF – the Dollar closed the week at 0.9150 on Friday after opening at 0.9233. A week ago, the USD/CHF pair was at 0.9150 as well. Weekly high traded for the Greenback was at 0.9242 on Thursday (12 August). The low for USD/CHF last week was at 0.9066, recorded last Friday.
AUD/USD – spent the week trading between 0.7316, the low recorded mid-week (10 August) and 0.7404 which was last Friday’s high. Australia’s National Australia Bank’s Business Confidence Index in July fell to -8.0 from June’s +11. The drop was a result of New South Wales lockdown due to the rise in cases of the Delta variant. The Aussie Dollar settled at 0.7371 on Friday after opening at 0.7338. The drop in US 10-year bond yield contrasted with a rise in Australia’s 10-year rate. Which lifted the Aussie Battler above its US counterpart.
NZD/USD – The New Zealand Dollar, or Kiwi as it is fondly known by traders, closed at 0.7038 on Friday after opening at 0.7002. The weekly high for the Kiwi was at 0.7063 last Friday (06 August). The Kiwi traded to a weekly low at 0.6968 mid-week.
USD/CAD – Against the Canadian Dollar, the Greenback finished little changed at 1.2515 after opening at 1.2517. Overall range for the USD/CAD pair during the week was between 1.2489 (weekly low hit on 12 August) and 1.2589, traded on 11 August.
USD/SGD – The Greenback finished at 1.3546 against the Singapore Dollar after it opened at 1.3578 on Friday. The weekly high traded for USD/SGD was at 1.3608 on Thursday in New York following higher-than-expected lift in the US Producer Price Index. Weekly low traded for the USD/SGD pair was at 1.3529 which was the low last Tuesday (10 August).
USD/THB – closed at 33.35 on Friday which was marginally lower than last Friday’s close at 33.45. During the week the Dollar traded to a high at 33.49 on Wednesday (11 August). Weekly low traded for the USD/THB pair was at 33.06, recorded a week ago (06 August).
USD/PHP – the Greenback finished the week at 50.68 on Friday after its opening at 50.58. The weekly high trade recorded for the USD/PHP pair was at 50.87 on Tuesday (10 August). Weekly low for the Greenback against the Philippine Peso was at 50.41 which was also hit on Tuesday (10 Aug).
EUR/JPY – The Euro ended lower against the Yen at 129.30 from its opening at 129.60. The lower close of the US 10-year bond yield had more impact on the USD/JPY than it did on the EUR/USD pair. A week ago, the Euro was fetching 129.65 Yen. Weekly low traded was at 128.97 hit overnight. EUR/JPY hit its peak at 129.81 on Thursday (12 August).
EUR/GBP – Against the British Pound, the Euro settled at 0.8505 at the close in New York on Friday, little changed from its opening at 0.8501. A week ago, the EUR/GBP pair was at 0.8477. The weekly high traded for EUR/GBP was at 0.8518 which was the overnight peak on Friday. Weekly low for the EUR/GBP was at 0.8450 recorded mid-week (11 August).
EUR/AUD – The Euro closed at 1.6002 Aussie Dollars, little-changed from its Friday after opening at 1.5994. Last week the EUR/AUD cross settled at 1.5990. The weekly low traded was at 1.5900, recorded on Thursday (12 August). The Euro hit its peak against the Aussie at 1.6014, overnight high traded in New York on Friday.
GBP/AUD – The Pound/Aussie cross settled at 1.8815 at the New York close on Friday. Amazingly the GBP/AUD cross began the day at 1.8815. A week ago, the British Pound changed hands against the Australian Dollar at 1.8860. The weekly high traded for this currency pair was at 1.8923 hit on Tuesday (10 August) following a drop in Australia’s NAB Business Confidence Index for July. Weekly low for GBP/AUD was at 1.8743 which was Friday’s low in New York trade.
GBP/JPY – Sterling finished at 152.00 on Friday after opening at 152.47. A week ago, GBP/JPY was at 152.90. Weekly low traded for the GBP/JPY was at 151.78 which was the low recorded on Friday. The weaker-than-forecast UK factory production data weighed on the Pound. Weekly high for GBP/JPY was at 153.31 traded mid-week (11 August).
AUD/JPY – The Aussie Dollar finished at 80.78 Japanese Yen after opening at 81.03. A week ago, the AUD/JPY cross was at 81.00. AUD/JPY hit its weekly high on Thursday (12 August) at 81.58 in New York trade. Weekly low for the Aussie was at 80.57 Yen, which was hit in overnight trade Friday.
AUD/NZD – Against the Kiwi, the Aussie was last at 1.0470 in late New York Friday. Last week, the Aussie was trading at 1.0490 New Zealand Dollars. The low traded for AUD/NZD was at 1.0436 which was the overnight low on Friday. Speculation that the Reserve Bank of New Zealand would be the first major central bank to hike rates buoyed the Kiwi.
AUD/CAD – settled at 0.9227 at the close of trade on Friday from its 0.9188 open. A week ago, the AUD/CAD pair was little changed at 0.9233. Weekly high traded was at 0.9251 recorded on Tuesday (12 August). The low traded last week was at 0.9174, hit Thursday in New York (12 August).
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