Australia's growth story gains momentum

Australian Dollar:

In a positive sign for Australia’s economy Gross Domestic Product figures yesterday showed that the domestic economy had grown by 1.1 percent during the first quarter of this year, beating the 0.9 percent target many had forecast. With a notable surge in exports and home building there is ample evidence to suggest that record low borrowing rates are having a positive economic and wealth effect helping dampen the blow for an economy in transition. Having reached an intraday low of 0.9295 when valued against its US Counterpart the glow of the Australian dollar faded as offshore investors entered the frame with the higher yielding asset only offering minimal gains upon open this morning trading at a rate of 0.9275. On the horizon today Trade Balance figures locally followed by the HSBC Services PMI Index from China remain the highlight over the coming 24 hours.

• We expect a range today of 0.9240 – 0.9300

New Zealand Dollar:

The downward trend for the New Zealand dollar has continued over course of the past 24 hours with the Kiwi touching a fresh three month low of 0.8401 when valued against its US Counterpart. Having now dropped close to 3 US Cents over the past month it’s now been proposed that the recent fall in both commodity prices and dairy prices may flow to a weakening of the growth outlook hence winding back expectations surrounding future interest rate increases. Opening lower this morning the New Zealand dollar currently buys 81.49 US Cents.  

• We expect a range today of 0.8380 – 0.8460 

Great British Pound:

Whilst investors have continued to keep their cards relatively close to their chest ahead of The Bank of England’s Policy announcement tonight overall the Sterling has remained under pressure this week trading between a low of 1.6697 and a high of 1.6767 when valued against its US Counterpart overnight. Despite onshore Services PMI surpassing expectation a weak employment read from the US damaged broader sentiment with the Great British Pound weaker as a result this morning at 1.6736. Meanwhile in other moves the Sterling is weaker also against the Aussie (1.8039) whilst flat against the Kiwi (1.9870).  

• We expect a range today of 1.8000 – 1.8080

Majors:

US Stocks have risen overnight with demand being bolstered off the back of a report which showed the services industry expanded during May at its fastest pace in nine months. Offsetting this to some degree their continues to be uneven signs of employment growth across the labour market as seen by last night’s disappointing payrolls report which excludes government agencies however revealing a smaller than expected employment gain. In currency moves the US dollar continued its mild upward trend gaining against the Yen, stronger this morning at 102.724. In what’s being touted as a key risk event investors will be sitting tight ahead of the European Central Banks policy decision this evening with the Euro remaining under-pressure in the lead up opening lower this morning at 1.3598 when valued against the greenback.

Data releases

• AUD: Trade Balance
• NZD: No data today
• JPY: No data today
• GBP: Official Bank Rate, MPC Rate Statement, Asset Purchase Facility
• EUR: Minimum Bid Rate, ECB Press Conference
• USD: Unemployment Claims, FOMC Member Kocherlakota Speaks