Australian Dollar:
The Australian dollar enjoyed a topsy-turvy 24 hours as trading bounced within a 130 point range. Employment data drove domestic direction as a dip in the overall unemployment rate and a record number of new positions added to the market helped propel the Aussie back above 0.92. Softer than anticipated Chinese Inflation data hampered any serious upswing and the rally stalled having touched intraday highs at 0.9220. Correcting lower the AUD again became a victim of Greenback strength as markets continue to adopt long USD positions on bets the Fed will look to raise rates sooner and more aggressively than previously anticipated. Wanning risk appetite added further pressure to the downside as escalating tensions in the Middle East came to a head as President Obama authorised airstrikes on ISIS strongholds in Syria and Iraq. Capping a remarkable downward adjustment the Aussie opens markedly lower again buying 0.9095 US cents at time of writing.
- We expect a range today between 0.9000 – 0.9220
New Zealand Dollar:
The New Zealand dollar opens lower this morning in the wake of yesterday’s RBNZ announcement. Having opted to keep interest rates on hold reserve bank Governor Glenn Wheeler confirmed the move towards a neutral bias was necessary while inflation forecasts remain stable and the currency stubbornly high. The comments and confirmation of a shift in policy stance drove the NZD to 7 month lows before finding support at 0.8160 and bouncing higher after several failed attempts to break lower. Attentions and focus now turn on key US and Chinese data steering direction into the weekly close.
- We expect a range today of 0.8080 – 0.8250
Great British Pound:
Sterling edged higher yesterday breaking back above 1.6250 as the market adjusts its expectations ahead of the September 18 Scottish referendum for independence. Fresh polls issued by pollsters Survation placed the ‘No’ vote in the lead with a slender majority. With little macro data on the economic calendar volatility will most likely be upheld with wild swings driven by political indicators expected in the week leading into the election as no clear direction is available at present.
- We expect a range today between 1.7700 – 1.8000
Majors:
The USD consolidated gains Thursday and is on track to post a ninth consecutive weekly advance. Weakening treasury yields on the back of increased tensions in the Middle East and a surprise surge in unemployment claims were not enough to dampen demand for the world’s base currency as markets and investors continue to back bets the Federal Reserve will adopt a hawkish tone. The Euro remains under pressure as ECB president Mario Draghi reiterated the Central Banks stance and willingness to do whatever it takes to prop up the flailing economy as he addressed guest at the Eurofi Financial Forum. The 18 nation bloc currency has found support bouncing of 14 month lows and opens this morning having consolidated at 1.2921 with pressure toward the downside mounting. Focus now turns to a busy US docket with retail sales and consumer sentiment driving direction. A positive reading will only add further support to the growing US recovery and increase expectations the Fed will be forced to adopt an upbeat tone when it convenes on Tuesday and Wednesday next week.
Data releases
- AUD: No Data
- NZD: Business NZ Manufacturing Index, FPI m/m
- JPY: Revised Industrial Production m/m and BoJ Governor Kuroda Speaks
- GBP: Construction Output and CB Leading Index
- EUR: Industrial Production m/m, Employment Change and EuroGroup meetings
- USD: Core Retail Sale, Retail Sales, Import Prices, Prelim Consumer Sentiment, Prelim Inflation Expectations and Business Inventories.
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