Weak Capex numbers fuel rate cut bets

Australian Dollar:

The Australian dollar has lost considerable ground over the past 24 hours when valued against its US Counterpart after ABS statistics showed overall capital expenditure dropped by 2.2 percent during the final quarter of 2014, a number well above the expected fall of 1.6 percent. Given the number contributes to the headline GDP print expectations surrounding a further interest rate cut by the reserve bank have since risen. Emphasising just how fragile the Australian dollar remains following a well-established rally the domestic unit once again appeared heavily when valued up above the 0.7850 mark opening this morning notably weaker when valued against the US dollar as it buys 77.90 US Cents.

• Today we expect a range of 0.7760 – 0.7840

New Zealand Dollar:

The New Zealand dollar has struggled in the face of strong US data overnight, unable to maintain its value when trading up above the 75.50 US Cents mark.   With the Greenback strengthening a separate report showed New Zealand exports fell by nine percent last month due to lower prices for diary whilst imports also fell by four percent.  During a session which generally favoured a move out of growth and commodity backed currencies the New Zealand dollar opens 0.3 percent lower this morning at a rate of 0.7518. On the outlook today investors will now be looking towards a read of business confidence as well building consents for the month of January.

• Today we expect a range of 0.7480 – 0.7560

Great British Pound:

Matching previous estimates of gross domestic product during the final quarter of 2014, Britian’s economy expanded by 0.5 percent numbers overnight confirmed. Providing some explanation for the lower Sterling this morning business investment fell at its sharpest rate in nearly six years, a move in line with the global fall in energy and petroleum prices. Opening weaker against the Greenback this morning at a rate of 1.5402 the Great British Pound is also weaker against both the Australian dollar (1.9763) and the New Zealand dollar (2.0473).

• Today we expect a range of 1.9700 – 1.9820

Majors:

The US dollar index, which measures the world’s reserve unit against a basket of currencies jumped to a five year high overnight following a report which showed core US inflation rose by 0.2 percent last month. Whilst the headline consumer price index suffered its biggest drop since 2008 such readings have been discounted given the number includes the impact of falling oil and energy prices. In other positive flows for the US economy a separate report showed US durable goods rebounded by 2.8 percent in January a number sufficient to be broadly supportive of US dollar strength.  Stronger against the Japanese Yen this morning at a rate of 119.42 the Greenback has also stretched its legs against the Euro with the EUR/USD opening more than a full cent weaker at 1.1195. In what’s shaping up as an equally busy 24 hour window a preliminary GDP print from the United States followed by CPI from Germany remain the pick on a jam packed economic calendar.  

Data Today

• AUD: No data today
• NZD: Building Consents m/m, ANZ Business Confidence
• EUR: German Prelim CPI m/m, French Consumer Spending m/m, Spanish Flash CPI m/m
• GBP: No data today
• JPY: No data today
• USD: Prelim GDP q/q, Chicago PMI, Pending Home Sales m/m, Revised UoM Consumer Sentiment, FOMC Member Dudley Speaks, FOMC Member Fischer Speaks