Aussie dollar slides on weak retail figures

Australian Dollar:

After coming off a night of strong gains the Australian dollar settled into the Asian session waiting on local figures to give direction for the day.     The AIG construction index was released early on however had a fairly muted affect as the main event Retail Sales was to be announced 2 hours later. The figures did come in higher than expected however fell short of forecast by 0.3 per cent at 0.1 per cent. The main highlight from the data was the uptake in spending in restaurants and cafes. The Aussie did slip on the back of this news dropping 11 points to 0.9336 nevertheless managed to consolidate soon after to 9 points within the open price. Overnight there was little volatility in the market and the AUD held its ground opening today slightly weaker than Wednesday at 0.9327. All eyes will now focus on domestic Employment change and the Unemployment rate being released just before midday.

• We expect a range today of 0.9285 – 0.9375

New Zealand Dollar:

The New Zealand Dollar began Wednesday with volatility on the back of a few comments from the Reserve Bank of New Zealand’s Governor. Mr Wheeler stated the Reserve bank may have to intervene in the Kiwi dollar if the fundamentals in the economy worsen stating they do believe the currency is now overvalued. The NZ dollar slid sharply after these remarks nearly half a cent from the open of 0.8751 against the US dollar. This was not the end of the currencies downward movements for the Session as the Employment change and employment rate were to be released shortly after. The New Zealand labour figures came in weaker than expected with the unemployment rate holding steady at 6.0 per cent. The market had forecast for a drop to 5.8 per cent. Conversely more jobs were added to the workforce as investors witnessed a gain of 0.9 per cent versus a forecast of 0.6 per cent. More citizens were deemed to have returned to the work force with the participation rate ticking upwards. However the NZ dollar was hit once more after this data dropping a further 40 points to 0.8711 as losses were nearing 1 per cent for the day. As the session continued the NZ dollar settled into a range and drifted slightly lower awaiting overnight data for direction. As the night sessions began the Kiwi continued to struggle losing further ground against the US dollar. Today we see the NZD open substantially weaker at 0.8662 against the US dollar and with no data out locally today investors will look offshore for guidance.

• We expect a range today of 0.8610 – 0.8705

Great British Pound:

After a fairly eventful Asian session on Tuesday for the British Pound against the US dollar the GBP barely moved on Wednesday trading in an extremely tight range. The British Pound opened at 1.6975 shifting in an 11 point medium for the best part of the day. The Sterling managed to gain back some of the losses experienced on Tuesday against the higher yielding currencies taking advantage of weaker than expected local data out of Australia and New Zealand. The British Pound was able to gain 22 points to 1.8179 after poor retail sales figures and similarly advanced 85 points against the New Zealand dollar to highs of 1.9479. Overnight the British Pound slid lower against the Greenback touching lows of 1.6953 and opens today only 2 points higher at 1.6955. The Sterling similarly struggled against the Aussie dollar opening this morning weaker at 1.8158 giving up yesterday’s Asian trade gains. Nonetheless the NZ dollar showed weakness across the board and the GBP opens this morning at 1.9539 against the Kiwi over 1 per cent stronger. Tonight all eyes will focus on the official cash rate from the bank of England which should give a good indication to investors as to how far along the bank of England views the UK’s economic recovery. 

• We expect a range today of 1.8120 – 1.8215

Majors:

The Euro settled back into the usual Asian session routine failing to move more than 6 points off the open price against the Greenback on Wednesday. The subdued trade was due to lack of local data and investors waited for overnight numbers for direction.

Overnight the Euro moved slightly lower against the US dollar as Russia took steps to ease the tension in the Ukraine. There were concerns over a civil war erupting however President Putin has stated Russia will do their part to put a resolution in place to end the crisis at hand. Federal Reserve chair Janet Yellen talked about the conditions in the labour market and how they were on the rise however they have a long way to go before reaching a point where they will be considered satisfactory. Yellen also stated that economic growth is expected to continue to develop this year even though quarter 1 did not get off to the best start.

In the US session tonight employment figures will be watched closely however the main event will be from the EuroZone. The European Central bank will announce their interest rate decision and while the focus will be around the demands for the ECB to put in place a rate increase, many economists believe this will take some time to be implemented and not take place tonight. 

Data releases: 

• AUD: Employment Change, Unemployment Rate
• NZD: No Data
• JPY: 10-y Bond Auction
• GBP: RCIS House Price Balance, Halifax HPI m/m, Asset Purchase Facility, Official Bank Rate, MPC Rate Statement
• EUR: German Industrial Production m/m, French Bank Holiday, Minimum Bid Rate, ECB Press Conference
• USD: Unemployment Claims, Fed Chair Yellen Testifies, FOMC Member Tarullo Speaks, Natural Gas Storage, 30-y Bond Auction