Strong US data as Greenback surges

Australian Dollar:

The Australian dollar finished off a busy week touching three and a half year lows of 0.8765 on Friday. The Aussie closed the week only 19 points higher at 0.8784 a long way from weekly highs which were just under 0.9100 on Monday. This fall was the Australian dollars worst 5 day slump since the middle of last year. Poor domestic and strong US data were the main cause for the week long slide. Overnight on Friday figures showed an expanding industrial sector and steady housing data in the US helping the US climb further against the Aussie. This week traders will keep their eyes on Chinese GDP and the CPI figures out in Australia to try and gain further understanding as to what the RBA’s next move will be. Today we see the Aussie dollar open at 0.8776 against the US.

• We expect a range today of 0.8720 – 0.8820

New Zealand Dollar:

The New Zealand Dollar slowed its rally against the Greenback on Friday as worries over China and strong data out of the US weighed in. The NZ dollar continued its gains against its cross-Tasman counterpart as data showed it is becoming clearer that interest rates will be shifting in New Zealand’s favour. The New Zealand Dollar was at an 8 year high against the Aussie at 94.80 earlier last week. The NZD opened on Friday at 0.8346 and only managed to gain 12 points before falling to close 3 points higher than the lows at 0.8260 for the day. All eyes will be focused on the heavy data out of China this afternoon to give the Kiwi its start for the week. Today we see the NZ dollar open at 0.8250 against the US and 0.9396 against the Aussie.

• We expect a range today of 0.8195 – 0.8310

Great British Pound:

The British Pound unlike most other major currencies managed to gain against the Greenback on Friday on the back of strong domestic data. The Sterling managed to climb hitting highs of 1.6446 and ended consolidating 10 points lower, half a per cent up for the session. UK retail sales figures increased 2.6 per cent in December, substantially more than the half a per cent gain expected. Retail sales the previous month were at a slim 0.1 per cent gain. Annual sales volume was the main bolster up 5.3 per cent, which was the quickest rate of expansion since late 2004. Today there is not much domestically being released with the only data being the Rightmove House Price Index out this morning. The British pound opens stronger against the US today at 1.6419 and similarly stronger against the Aussie 1.8705 and Kiwi 1.9901.

• We expect a range today of 1.8665 – 1.8775

Majors:

The Euro had one of the biggest slides against the US dollar last week finishing off at 1.3560 against the Greenback. On Friday the Euro only reached 5 points above the open to 1.3621 before hitting weekly lows of 1.3556. The uncertainty at the moment as to the future course of the monetary policy of the US central bank has most investors watching cautiously. 

The Euro was surrounded by speculation that its cowed inflation viewpoint will bring about the European Central Bank to ease monetary policy to help with the revival of the Euro Zone. The Euro also tumbled against the British Pound almost reaching one year lows on Friday down 1% to 0.8244.

The US dollar began Friday under pressure as the University of Michigan’s consumer sentiment was reduced from previous months to 80.4 for January. This came on the back of homes on the lower end of the income spectrum cutting back their monetary prospects in the first month of 2014. The US however was supported after positive housing starts data and industrial production which was in line with forecasts.  The strong reports out of the US gave to demand for the Greenback and continued to point at the likelihood of continued tapering from the Federal Reserve to continue during 2014. 

Thursday this week will have Euro Zone PMI data whist in the USA initial jobless claims and existing home sales should be key. Today marks Martin Luther King Day in the US so markets are expected to be relatively quiet and Investors will be looking to European data and substantial data out of China for Direction.

Data releases:

• AUD: MI Inflation Gauge m/m,
• NZD: Reinz HPI m/m
• JPY:  Revised Industrial Production m/m
• GBP: Rightmove HPI m/m
• EUR: German PPI m/m, Spanish HPI q/q, German Buba Monthly Report,
• USD: Bank Holiday