Australian Dollar:
Having touched 3 month highs early last week the Australian dollar moved lower into the weekly close relinquishing all gains as markets looked to square positions ahead of Tuesday’s RBA rate statement. The pace of last week’s sell off suggests the AUD was overbought leaving the door open for a deeper retracements toward 0.7750 and 0.7665 should the Central Bank, as expected, cut the benchmark cash rate. A short term rally is of course possible should policy makers break from expectations and maintain the current dogma with traders eying a push back toward 0.79/0.7950. Monetary Policy remains the primary directional driver and while Building Approvals will offer an insight into wider economic health attentions are squarely tuned into Tomorrows rate decision.
- We expect a range today of 0.7750 – 0.7920
New Zealand Dollar:
The New Zealand dollar was driven lower Friday falling back below 0.76 and closed the week buying 0.7519 US cents. The Kiwi failed to capitalise on last week’s Greenback sell off as RBNZ Governor Graeme Wheeler suggested future upward rate adjustments were unlikely and that the policy committee would maintain its current stance into the foreseeable future. While support still holds at 0.75 and 0.7450 attentions will be squarely focused on Chinese Manufacturing PMI for direction through Monday before unemployment and labour market numbers headline the domestic economic calendar on Wednesday.
- We expect a range today of 0.7450 - 0.7630
Great British Pound:
The Great British Pound relinquished all of last week’s early gains into the weekly close as a jump in U.S consumer confidence and a stable manufacturing print helped the world’s base currency find solid ground. Having touched a near two month high at 1.5469 Cable turned lower on softer than anticipated Manufacturing PMI. While still printing above the key level of expansion the print was well below market estimates and highlights the uncertainty surrounding the pace and strength of economic recovery. Attentions now turn to Thursday’s General election.
- We expect a range today of 1.9110 – 1.9500
Majors:
USD net longs pulled back to four and a half month lows as speculators parried positive bets and extended the timeline of expectation on monetary policy adjustments. The Greenback posted its worst monthly performance in almost 4 years through April loosing almost 4% against a basket of major counterparts. Having suffered a string of weaker than anticipated macroeconomic data sets throughout the first quarter, highlighted by last week’s poor advanced GDP print, the world’s base currency is struggling to maintain its bullish run. Growth all but ground to a standstill in the first 3 months of 2015 raising concerns over the strength of economic recuperation and placing even greater importance on Friday’s Non-Farm Payroll numbers. A second consecutive print below expectations will likely serve to push back the Federal Reserves anticipated interest rate increase and while the long term bullish trend is still intact markets may look to reverse short term expectations.
Data releases:
- AUD: Building Approvals m/m and ANZ Job Advertisements m/m
- NZD: ANZ Commodity Prices m/m
- JPY: Bank Holiday
- GBP: Bank Holiday
- EUR: Spanish, Italian, German, French and Eurozone Manufacturing PMI and Sentix Investor Confidence.
- USD: Factory Orders, FOMC Member Evans Speaks and Loan Officer Survey.
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