The dollar is creeping higher once again this morning as it hit a new 12 month high overnight with the trend higher looking day by day to become more entrenched. The Aussie dollar has been one to suffer the most following last night’s RBA rate decision which saw the central bank keep it interest rate at an all-time low of 2.50% and maintain a dovish bias towards its currency. It has been consistently saying the Aussie is too strong and talking it down although little in the way of significant downside momentum has materialised over the long term. For the RBA at least they still have plenty more room to move interest rates lower, so they can at least match their words with action and they’ve been steadily lowering rates since November 2011. But when you compare that to the Eurozone, the topical subject of FX markets for this week, the talk from the ECB seems to be little more than just that. AUDUSD was quick to move back below the 0.9300 level and sits at 0.9290 at the time of writing with bears eying the near term support at 0.9270 and then 0.9240.
So to the Eurozone which saw yesterday manufacturing PMI surveys did little to help the prospects of the single currency. Italy in particular a focus since its economy recorded negative GDP growth for Q2 last week, saw its manufacturing survey dip back below the 50.0 level indicating contraction. Whilst in the near term there’s a chance of a bounce with some technical indicators having been signalling oversold for some time, the overarching trend for EURUSD remains downward and is hovering just above its recent lows at 1.3130.
A quick mention for sterling which is coming under a little pressure this morning following the most recent Scottish referendum poll which showed a significant narrowing of opinions, giving the Yes campaign a boost. GBPUSD has been heading lower as I write this now sitting at 1.6555 and will be one to keep an eye on as18th September approaches.