AUD under pressure as weaker Chinese exports spark risk off trade

Australian Dollar:

While Victoria, South Australia and the ACT enjoyed an extended public holiday weekend liquidity within the domestic session was reduced and the AUD was left to vices offshore influences. The Aussie drifted lower as markets responded to the plunge in Chinese Exports. A shocking 18.1% nosedive is the biggest deficit in two years and sparked fears the world’s second largest economy may be weaker than first expected. When coupled with rising tension in the Crimea and Ukraine as the Ministry for Defence announced Ukrainian forces will be combat ready, markets looked to safety as risk off strategies took hold and forced the Australian dollar toward an intraday low of 0.9013. The focus shifts back to the domestic docket today and NAB business confidence for further direction as the AUD swaps hands this morning at 0.9022.        

• We expect a range today of 0.8960 -0.9080.

New Zealand Dollar:

The New Zealand dollar remained range bound for much of yesterday struggling to break outside a 40 point band between 0.8440 and 0.8480. The domestic docket offered little to spark investor interest leaving the Kiwi to the vices of offshore stimuli and while weaker Chinese export numbers saw the currency drift lower in early trade expectations of an RBNZ rate rise on Thursday were enough to support the currency unit. The economic calendar is again free of headline data today and we expect the NZD to linger either side of 0.8450 as we open this morning at 0.8469.

• We expect a range today of 0.8400 – 0.8500

Great British Pound:

The Great British Pound traded weaker throughout Monday forced lower by Bank of England Deputy Governor Charlie Bean. Addressing the North East Chamber of Commerce Presidents Club Bean stepped away from his typically hawkish tone suggesting that a stronger Pound may hurt the U.K economic recovery. With the domestic docket otherwise void of headline data markets shunned Sterling sending it to an intraday low of 1.6623 against its US counterpart. Investor focus now turns to today’s Manufacturing numbers and inflation report for further guidance as GBP opens lower against both the AUD and NZD.

• We expect a range today of 1.8400 – 1.8550  

Majors:

The Greenback remained little changed against major counterparts while stronger against high yielding assets through Monday Trading as the currency continued to recover from last week’s trimming ahead of Friday’s employment data. The stronger Jobs numbers helped counteract a shift away from an ECB easing bias while tensions in the Ukraine and disappointing Chinese Export numbers bolstered the Yen as markets looked to safe haven assets. Further USD support was stimulated by comments from FOMC member Charles Plosser overnight as Bank of Philadelphia head reiterated the Federal Reserve commitment to tapering suggesting It would take a big swing either way to sway the central bank from its current path. Attention now turns to Jolts Jobs Openings today and Retail Sales Thursday for US direction while the conclusion of the BoJ’s two day Press conference will absorb investors throughout the Asian session.  

Data releases

• AUD: NAB Business Confidence
• NZD: No Data
• JPY: Monetary Policy Statement, BoJ Press Conference and Preliminary Machine Tool Orders.
• GBP: Manufacturing Production m/m, Industrial Production m/m, 10 Year Bond Auction, NIESR GDP Estimate and Inflation Report Hearings
• EUR: German Trade Balance and ECOFIN Meeting
• USD: NFIB Small Business Index, JOLTS Job Openings and Wholesale Inventories