Currency markets stable as volatility levels plummet

Australian Dollar:

The Australian dollar remained steady when valued against its US Counterpart last week ranging between the familiar band of 0.9320 – 0.9420. Highlighting just how reluctant investors have become the key resistance level of 94 US Cents still represents a major hurdle for the higher yielding asset a hurdle which has been reached but not overcome. With many investors now searching for a trigger point in the hope volatility may rise, major currencies globally appear destined to follow broader longer-term yields in the near term unless some type of geopolitical surprise spurs a risk selloff. Weaker this morning at a rate of 0.9368 the Australian dollars first challenge this week comes in the form of the HSBC Manufacturing PMI Index which is scheduled for release just before midday.  

• We expect a range today of 0.9340 – 0.9390

New Zealand Dollar:

The New Zealand dollar struggled to maintain its value up above the 87 US Cents level on Friday with investors instead choosing to shift their attention to the Greenback. With a stronger US dollar weighing on the Kiwi lows of 0.8680 came into play late in the session, half a cent lower than its late week high of 0.8720. Lower this morning as the New Zealand dollar buys 86.95 US Cents, manufacturing numbers from China this morning remain the highlight of another wise thin looking economic docket.   

• We expect a range today of 0.8660 – 0.8730

Great British Pound:

Clinging to the 1.7000 mark when valued against its US Counterpart upon open this morning the Great British Pound appears overly heavy around existing levels, a stance determined by the long-term upward trend of the Sterling which has resulted in an appreciation of more than 3 and half cents over the past month. Entering the new week sitting right on the psychological support level of 1.7000 short-direction will remains poised to be influence by BOE Governor Mark Carney who testifies on the Central Banks May Inflation Report tomorrow. Lower this morning against both the Greenback (1.7010) and the Aussie (1.8137) the Sterling is steady against the Kiwi (1.9545).  

• We expect a range today of 1.8100 – 1.8160

Majors:

Indicative of the type of calm which has been witnessed across currency markets of late, a measure of US Stock volatility has managed to drop by a whopping 11 percent over the past 5 days of trade, its lowest level since February 2007. During a week dominated by the FOMC statement which re-iterated the intentions of policy makers to keep interest rates low for an extended period the watering down of a market already flush with liquidity has only added to the ongoing search for yields with many of the major units struggling to attract much interest as a result. Stronger this morning against the Yen at a rate of 102.045 the US dollar is also marginally stronger against the Euro as it currently swaps hands at a rate of 1.3589. Garnishing the most interest this evening will be Eurozone inflation followed by industrial production figures from the United States.

Data releases

• AUD: RBA Gov Kent Speaks
• NZD: Westpac Consumer Sentiment
• JPY: BOJ Monthly Report  
• GBP: No data today
• EUR: CPI y/y, Core CPI y/y, German Buba Monthly Report
• USD: Empire State Manufacturing Index, TIC Long Term Purchases, Capacity Utilization Rate, Industrial Production m/m, NAHB Housing Market Index