Australian dollar weakens ahead of Rate Statement

Australian Dollar:

Having started the new week up above the 93 US Cents handle yesterday the Australian dollar appeared flat open that is despite robust manufacturing data out of China over the weekend. Slumping to a late session low of 0.9233 when valued against its US Counterpart the major catalyst for the move lower came in the form of building approval numbers which showed the approval for the construction of new homes slumped by 5.6 percent in April, its third consecutive decline in as many months. In what’s set to create even a great degree of volatility today investors will be mindful of retail sales due out at 11:30am AEST and the HSBC Final Manufacturing PMI at 11:45 followed by the Reserve Bank interest rate decision this afternoon. Opening this morning more than half a cent lower the Australian dollar currently buys 92.45 US Cents.

• We expect a range today of 0.9200 – 0.9300

New Zealand Dollar:

The New Zealand dollar has been outpaced by the Greenback over past 24 hours unable to keep pace with the world’s reserve currency which strengthened amid signs the economy is finally starting to strengthen after adverse weather conditions clouded the economic picture. In a week set to be dictated by offshore economic flows investors will be eyeing today manufacturing and non-manufacturing indicators from China, a move likely to trigger underlying currency flows. Weaker this morning having touched an overnight low of 0.8439 the New Zealand dollar currently swaps hands at a rate of 0.8450.

• We expect a range today of 0.8420 – 0.8480

Great British Pound:

The Great British Pound has advanced overnight for the first time in seven days against the Euro whilst struggling to notch up any further gains against the US dollar after a report showed UK manufacturing output expanded in May, boosting demand for the currency and lifting sentiment surrounding Britain’s economy. Whilst struggling in the face of a much stronger Greenback last night’s moves do suggest the market for the time being is already long Sterling given Britain’s projected growth trajectory. With a long position viewing the currency as an asset that will rise, further evidence will be gathered on Thursday when The Bank of England meet to discuss their policy stance. Lower against the Greenback at 1.6746 the Sterling is significantly stronger against the Aussie (1.8108) and the Kiwi (1.9811).

• We expect a range today of 1.8070 – 1.8140

Majors:

Following weeks of stagnated moves across broader currency markets, a handful of major pairs remain poised for an outbreak over the coming days with four central bank meetings, key employment and PMI numbers all set to capture investors’ attention. In moves overnight Euro Final Manufacturing PMI fell from an expected read of 52.5 down to 52.2 whilst PMI readings in Spain and Italy also missed their mark. Demonstrating a notable fall in output the Euro was sold off from an earlier high of 1.3635 against its US Counterpart to open lower this morning at a rate of 1.3597. During a session which generally favoured the US Dollar the Greenback is stronger against the Yen this morning at 102.362.

Data releases

• AUD: Cash Rate, RBA Rate Statement, Retail Sales m/m, Current Account
• NZD: Overseas Trade Index q/q
• JPY: No data today
• GBP: Nationwide HPI m/m, Construction PMI
• EUR: Spanish Unemployment Change, CPI Flash Estimate y/y
• USD: Factory Orders m/m