USD lower on the back of Feds comments

Australian Dollar:

The Australian dollar began the day trailing downwards after strong US data the night before had already weakened the higher yielding currency. The Melbourne Institute released the leading index early on in Asian trade however the data had a muted effect which is not uncommon due to most of the indicators being used for previously calculations. As the day continued the AUD drifted higher than the open price against the Greenback as investors waited eagerly on Chinese data that was to be released at midday. The Chinese figures helped the AUD bounce to 0.9369 which was a daily high after the first quarter GDP was recorded slightly ahead of forecast at 7.4 per cent. Overnight the Australian dollar rallied on the back of USD weakness after US Federal Reserve chair Janet Yellen indicated that interest rates in the US would remain low for a significant time. Today the Aussie dollar opens marginally stronger against the US dollar at 0.9376. All eyes will now turn to the local NAB Quarterly business confidence and new motor vehicle sales however the main event will be Philly Fed Manufacturing index and Unemployment claims out of the US overnight.

• We expect a range today of 0.9330 – 0.9405

New Zealand Dollar:

The New Zealand dollar has been one of the more resilient currencies against the strong Greenback in recent times however today the Kiwi began the day drifting downwards as investors waited on NZ Inflation data. The consumer’s price index increased by 0.3 per cent for the first quarter of 2014 however this was 0.2 per cent shy of forecast which caused the Kiwi to drop 40 points to 0.8601 versus the US. The upsurge in the index was on the back of cigarette and tobacco price increases. After the data was released the higher yielding currency continued to drift lower as investors anticipated US data for further guidance. Overnight the comments from US Federal Reserve chair did weaken the US dollar as the indicative time frame to the lifting of interest rates was extended. This caused weakness in the Greenback across the board and the NZ dollar did manage to gain back most of its lost ground. The Kiwi touched highs of 0.8648 however still opens slightly weaker today at 0.8623 against the US dollar. Today investors will be watching the US figures overnight as there is no data being released domestically.

• We expect a range today of 0.8585 – 0.8670

Great British Pound:

The British Pound increased across the board on Tuesday night against most majors however began Wednesday quietly trading against the US dollar. The British Pound moved in a narrow 14 point margin barely shifting during the Asian session as investors waited cautiously on overnight data for direction. Conversely due to local data out in Australia, New Zealand and China the GBP found volatility against the higher yielding currencies during Asian trade. Early in the session the NZ Cost Price Inflation figures weakened the NZ dollar and the Sterling took full advantage managing to gain 95 points. As the session continued the Kiwi shrugged off the Chinese figures and kept sliding as the GBP reached daily highs of 1.9490. The Aussie dollar followed a different path to the Kiwi as it reacted positively to the Chinese GDP figures. The AUD jumped on the data 50 points against the British Pound and as the day continued the Sterling weakness continued, sliding to daily lows of 1.7836. Overnight the data released from the UK was positive and the British Pound rallied against most major currencies. The amount of people claiming unemployment benefits fell more than expected whilst the unemployment rate dropped to a 5 year low of 6.9 per cent. This data underlines the extent to the economic recovery and will bring back a debate over whether it is time to look at increasing interest rates from the bank of England. On the back of these figures the British Pound rallied to highs of 1.6814 against the US dollar and opens today at 1.6798. Correspondingly against the AUD and NZD the Sterling hit levels of 1.7991 and 1.9560 respectively opening significantly stronger at 1.7929 and 1.9479 this morning.

• We expect a range today of 1.7875 – 1.7965

Majors:

Wednesday was another quiet day for the Euro and the US dollar during Asian trade as the currency moved less than 12 points from open. Subdued trade was due to a heavy night session close by as investors waited cautiously for data releases out of the US and Europe.

The main news for the night was US Federal Reserve Janet Yellen’s indication that the time frame as to when interest rates may be lifted in the US will be extended. The rates will be left low as the economy is left to recover and economic indicators will be watched closely to ensure the interest rate adjustments are done at the correct time. 

The Euro’s gain on the US dollar was softened by Inflation data which did slow at the expected rate to 0.5 per cent however has now been below 1 per cent for half a year giving thought to the idea that more stimulus measures need to be put in place to help with the recovery in the Eurozone. Today the Euro opens marginally higher against the US dollar at 1.3815.

All eyes today will turn to the US as Unemployment claims and Philly Fed Manufacturing could give a further indication as to the time frame for further tapering on the US55 billion dollar a month asset purchase program.

Data releases:

• AUD: Nab Quarterly Business Confidence, New Motor Vehicle Sales m/m
• NZD: No Data
• JPY: BOJ Gov Kuroda Speaks, Consumer Confidence
• GBP: No Data
• EUR: German PPI, Current Account
• USD: Unemployment Claims, Philly Fed Manufacturing Index, Natural Gas Storage