US economy shows signs of weakness

Australian Dollar:

During one of the quietest days of trade we’ve seen this year the Australian dollar remained solid yesterday staying well within recent ranges when valued against its US Counterpart. During a remarkable month which has seen the local currency range between 0.8930 – 0.9080 such trading parameters remain still well intact. With tomorrow’s fourth quarter capital expenditure figures being eyed as the next major event for the Aussie the higher yielding asset remains poised for a short-term rally should the positive risk environment remain. Opening this morning only marginally weaker at 0.9014 much of the same is expected over the coming 24 hours.

• We expect a range today of 0.8980 – 0.9040

New Zealand Dollar

The New Zealand dollar opens in familiar territory this opening at a rate of 0.8326 having drifted between a low of 0.8316 and a high of 0.8343 when valued against its US Counterpart yesterday. Whilst broader currency flows in general overnight favoured a shift back into safe haven assets amid concerns over a depreciating Chinese Yuan overall the Kiwi has done well to remain within its recent ranges. Given the lack of movement during the early parts of this week investors will be keen to see improved liquidity which should lift given the expected release of Trade Balance figures tomorrow followed by the ANZ Business Confidence Survey on Friday.  

• We expect a range today of 0.8290 – 0.8360

Great British Pound:

A softer Greenback overnight has assisted the Great British Pound which opens this morning 0.2 percent higher at a rate of 1.6678. Also helping the Sterling overnight were two domestic data prints (Mortgage approvals and CBI Realized Sales) which both comfortably surpassed expectation. Marking an end to last week’s falls the Sterling at least for the time being appears on steadier ground ahead of Gross Domestic Product figures which are due for release this evening. Meanwhile against both the Australian dollar (1.8497) and the New Zealand dollar (2.0025) the Sterling is also stronger.

• We expect a range today of 1.8460 – 1.8530

Majors:

During a subdued session which saw only limited movement across currency markets figures overnight showed home prices in the US climbed at a slower than expected pace in the year through December. Whilst marking the first deceleration since June home prices still managed to rise by 13.4 percent across 20 cities from December 2012. In other data prints overnight the conference board report showed a measure of consumer confidence fell to 78.1 missing the expected mark which was 80.2. Notching up its biggest tumble in four months, the Greenback has done well to hang on over the past 24 hours as it opens marginally weaker against the Yen this morning at a rate of 102.143. In other currency moves the Euro is in familiar territory this morning opening at a rate of 1.3742 with investors unwilling to take the shared unit higher until the $35 billion European bailout for the Ukraine becomes a more concrete one.   

Data releases

• AUD: Construction work done q/q
• NZD: No data today
• JPY: No data today
• GBP: MPC Member Broadbent Speaks, Second Estimate GDP q/q
• EUR: GfK German Consumer Climate
• USD: New Home Sales