Australian Dollar:
As expected the Australian dollar was subject to a market with limited volatility on Tuesday as the higher yielding currency struggled for momentum. The AUD opened the Asian session at 0.9239 as the overall market sentiment recently has been on the downside to the US92 cent handle after the Aussie has spent the previous few weeks trying to break upwards of US94 cents. However on Tuesday the AUD drifted upwards not driven by much more than market sentiment making highs of 0.9264 and lows of 0.9238 remaining in an unusually tight 26 point range during Asian trade. Overnight the US currency was stronger on the back of a positive mix of numbers however the resilient AUD made back all the overnight losses early this morning opening slightly higher today at 0.9259. Today investors see a slightly heavier economic docket both domestic and foreign, nonetheless onlookers will watch closely for the Australian Private Capital Expenditure on Thursday for further direction.
- We expect a range today of 0.9205 – 0.9295
New Zealand Dollar:
The NZD followed a similar trend to its cross Tasman counterpart the Aussie dollar on Tuesday failing to move to far from its open against the Greenback. The New Zealand Dollar opened at 0.8550 and touched lows 4 points below at 0.8546 however drifted upwards as US dollar weakness was seen across the board reaching highs of 0.8579. There was no data locally during Asian trade for the NZ dollar however overnight positive US indicators were announced including consumer confidence and US housing which helped the Greenback retrace some of the Asian session losses. However early this morning the higher yielding currency gained back on the overnight slump opening 10 points higher today at 0.8560. Investors will be watching the local data closely tomorrow as ANZ business confidence will give the Kiwi some much needed direction and a great idea of the domestic business sentiment in New Zealand.
- We expect a range today of 0.8515 - 0.8605
Great British Pound:
Coming off a public holiday on Monday the Sterling experienced another quiet session during Asian trade against the Greenback and the higher yielding currencies. The currency markets witnessed across the board US dollar weakness and the British Pound took full advantage in a session with no data releases for direction managing to gain a quarter of a percent against the US dollar to reach highs of 1.6869. With no data out in Australia or New Zealand to sway the higher yielding currencies on Tuesday the GBP was range bound against the AUD and NZD as investors awaited UK Mortgage approvals for some guidance later in the afternoon. The Mortgage approval data from the UK was not as forecast being the lowest figure seen in close to eight months and this set the tone for the Euro and US sessions. The positive numbers from the US guided the GBP even lower touching 1.6783 before opening this morning close to half a cent weaker at 1.6809 against the Greenback. The British Pound similarly fell against the higher yielding currencies opening lower this morning at 1.8155 and 1.9634 against the AUD and NZD respectively. We expect a range today of 1.8100 – 1.8205
Majors:
The quiet start to the week continued into Tuesday’s Asian session after public holidays in the UK and the US. The main theme for Asian trade was slight US dollar weakness as we saw the Euro gain nearly a quarter of a percent against the Greenback to highs of 1.3668.
Overnight the data releases from the US were strong and the Greenback reversed the Asian session trend of weakness gaining against most majors. Consumer confidence which was the main event on the docket rose to 83.0 from a previous release of 81.7 whilst earlier the Housing Price Index showed strong signs posting a slight rise on expectations. The strong US numbers continue to add to investor’s speculation that the US Federal Reserve will continue the reduction of stimulus as the economic recovery in the United States appears to be well on the way.
The Euro saw a second night where ECB president Draghi spoke. Draghi talked about how the ECB is prepared to combat negative inflation as the Central Bank has gone through an array of options which will involve interest rate cuts and stimulus packages to help with the much needed recovery in the Eurozone.
Tonight markets look to experience another quiet session with no data from the US and limited releases from the Euro ahead of French and German bank holidays.
Data releases:
- AUD: MI Leading Index m/m, Construction Work Done q/q
- NZD: ANZ Business Confidence
- JPY: BOJ Gov Kuroda Speaks
- GBP: CBI Realised Sales
- EUR: German Import prices m/m, French Consumer Spending m/m, German Unemployment Change, M3 Money Supply y/y, Private Loans y/y, Spanish HPI q/q, German 30-y Bond Auction
- USD: No Data
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