The market in brief:
• AUD and NZD open lower again
• NZ Building Consents pick up
• German inflation better than expected
• Spanish inflation tanks but GDP up
• US ADP Non-Farm Employment lower
• US GDP sky rockets
• US Federal Reserve’s FOMC slightly optimistic
Market moving events for the next 24 hours:
• Australian Building Approvals
• UK House price Inflation
• Eurozone inflation
• US Weekly Unemployment Claims
AUDUSD:
The Australian Dollar dropped to an 8 week low as the US dollar strengthens amid better than expected US data and global risk averse sentiment. The Federal Reserve’s FOMC met this morning and although they see signs of a pickup in the economy and employment situation they did state that interest rates were to stay at 0%-0.25% for a “considerable timeâ€Â. It’s that statement that gives this scribe the confidence to see the local currency pick up once again, longer term, given the AAA rated yield on offer here. This morning sees the release of domestic Building Approvals and then overnight we have the US weekly Unemployment Claims printed. However we’d expect the recent range to hold for today as the more important data releases from both on shore and off are set to hit the tapes tomorrow. We’d therefore suggest exporters jump on board now, whilst importers place orders for an expected recovery.
AUDEUR:
A night of much better than expected data from mainland Europe saw the Euro rally back to levels last seen 2 weeks ago. German inflation printed at +0.3%, versus +0.2% expected and Spanish GDP grew +0.6%, from +0.4% the quarter before. The lack of any backlash from Russia over the new sanctions, contributed to the Euros renewed strength as did the technical picture with the common currency tracking back to initial resistance turned support that held in November last year and also in the middle of last month. Firmer support sits 30 points lower and any positives for the EU / negatives for the Aussie will almost certainly see that level traded.
AUDGBP:
The Pound also broke out of the week long tight trading range, despite a lack of UK data, as the market reacted to a stronger Euro. The EU is the major trading partner of the UK, so any signs of a pick up on the mainland should flow through across the Channel. Except for House Price Inflation due this afternoon, there is no British data of note set for release until next week so direction will be determined by economic events elsewhere. Longer term we are very much in a downward channel and could well be on the way to the bottom of that so set a target 75 points below.
AUDNZD:
Having hit our much discussed technical target yesterday, the Tasman Cross has fallen 50 points as AUD sellers filled their boots at levels not seen for the whole of 2014 and as NZ Building Consents improved. There is no NZ denominated data set for release until next week so direction will be dictated domestically. The best AUD sellers can hope for is for sideways price action where as NZD sellers may get some further reprieve ahead of the weekend.
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