AUD maintains an elevated level

Australian Dollar:

Despite falls on Wall Street and lower metal prices it’s a familiar story for the Australian dollar this morning which has once again hit fresh four months highs during overnight trade. Appreciating by more than half of one US cent from opening levels, its top point of 0.9272 represents its highest level since November 21. With US data prints overnight remaining solid, the underlying numbers suggest that policy makers would still like a larger economic improvement given the degree of stimulus which has been thrown at the world’s largest economy. During a generally risk positive session the Australian dollar opens this morning stronger at a rate of 0.9260. Looking ahead over the coming 24 hours there isn’t a great deal on the horizon suggesting investors will keep the Aussie in a holding pattern ahead of next week which is packed full of key risk events. 

• We expect a range today of 0.9220 – 0.9290

New Zealand Dollar:

It was all one way traffic for the New Zealand dollar overnight which traded to its highest level in more than two and half years when valued against its US Counterpart, buoyed by comments made by Deputy Reserve Bank Governor Grant Spencer in Hong Kong who stated a higher Kiwi would not deter policy makers from raising interest rates further. Reaching a 24 hour high of 0.8684 a lot of the Kiwi’s strength can also be explained by yesterday’s better than expected trade balance number which showed the highest ever trade surplus during the month of February. Given New Zealand’s economy continues to benefit from the exportation of primary products, it appears thus far the higher dollar hasn’t caused too much pain. Stronger this morning the New Zealand dollar currently buys 86.73 US Cents.

• We expect a range today of 0.8630 – 0.8690

Great British Pound:

Sterling pushed higher throughout Thursday as retails sales projected a 1.7% increase for February. Forcing the Pound back through 1.66 against its US counterpart the strong reading heaps pressure on the Bank of England to bring forward changes in Monetary Policy. Attention now turns to key GDP and Current Account data due today with markets expecting healthy growth on quarter four readings. Expectations of a 0.7% increase in national GDP and a narrowing in the Current Account deficit will only bolster calls for interest rate rises and reiterate the strength of the UK recovery, however concerns that the sustainability of growth cannot be maintained unless household saving ratios also increase may put some topside pressure on a GBP advance.

• We expect a range today of 1.7875 – 1.8025 

Majors:

The Euro declined across the board yesterday dipping to a 3 week low against its UK counterpart. Speculation that the ECB will look to adopt additional easing of Monetary Policy increased as Central Bank Governing member Luis Linde commented “more monetary easing has not been ruled out”. As the Bloc Currencies Central Bank attempts stave off deflation the suggestion of negative deposits and 0% interest rates are forcing investors away from the Euro. The US dollar regained early losses as lower than expected unemployment claims and stable GDP numbers helped offset a sharp decline pending home sales. With markets keenly focused on the commodity currencies the Greenback loss ground to both the NZD and AUD while gaining against Euro and Yen. The focus now turns to consumer sentiment and inflation expectations for direction into the end of the week.   

Data releases

• AUD: No data today
• NZD: No data today
• JPY: Household Spending y/y, Tokyo Core CPI y/y, Retails Sales y/y
• GBP: Current Account, Final GDP q/q
• EUR: German Prelim CPI m/m, French Consumer Spending m/m, Italian 10-y Bond Auction
• USD: Core PCE Price Index m/m, Personal Spending m/m, Revised UoM Consumer Sentiment