AUD lower ahead of key releases from China

Australian Dollar:

Re-iterating its stance that The Reserve Bank of Australia are likely to follow a path of considerable interest rate stability, minutes from the banks July meeting showed that whilst the current accommodative stance is set to remain in place for some time, importance would be placed on monitoring economic conditions ahead of a quarterly inflation report next week. In minutes which had only a mild influence on the Australian dollar, the domestic unit fell from a high of 0.9400 down to a low of 0.9368 more off the back of some mild Greenback strength ahead of domestic happenings. Lower this morning at a rate of 0.9370 when valued against its US Counterpart Chinese GDP numbers due for release around midday AEST provide a backdrop for added volatility

• We expect a range today of 0.9330 – 0.9420

New Zealand Dollar:

The New Zealand dollar has come under some solid selling pressure over the past 24 hours weighed down by the latest Global Diary Trade Auction which demonstrated a clear drop in dairy prices. Falling also after Federal Chair Janet Yellen was deemed to be more upbeat regarding the health of the world’s largest economy, the overnight shift back into US dollar denominated assets hurt the Kiwi’s cause. Falling from an earlier high of 0.8817 when valued against its US Counterpart the New Zealand dollar is weaker upon open this morning buying 87.65 US Cents.  In what’s set to further rock the boat today investors are now looking towards the release of Industrial production and growth numbers from China early this afternoon as well local inflation numbers due out shortly.

• We expect a range today of 0.8720 – 0.8800

Great British Pound:

Investors have snapped up the Great British Pound overnight after figures showed UK inflation had accelerated at a rate of 1.9 percent in June from a year earlier, up from 1.5 percent in May. With prices now having risen at their fastest pace January speculation has since mounted that the Bank of England will raise Interest rates in response sooner rather than later. Comfortably passing through the 1.7100 level when valued against its US Counterpart the Sterling has managed to capture 60 basis points worth of gains, opening stronger this morning at a rate of 1.7141. In other currency moves the Sterling’s performance was equally as impressive when valued against both the Australian dollar (1.8291) and the New Zealand dollar (1.9543) with both pairs opening more than 1 cent higher.

• We expect a range today of 1.8250 – 1.8330

Majors:

The US Dollar has advanced overnight climbing against most other leading currencies after Federal Reserve Chair Janet Yellen provided a slightly more upbeat synopsis that what the market had priced in. Whilst her comments were overall well received Yellen did emphasise that policy makers would keep monetary policy loose until evidence suggested that real wages were rising in line with an increased appetite to find work. Somewhat countering the positive influence that a falling unemployment rate has had, labour market participation rates along with wage lead inflation remain very low. Not doing enough to shift the current interest rate curve markets are still anticipating higher rates by mid-2015, a move which would see the US dollar weighed down until such a time. Stronger against the Yen this morning at 101.669 the Euro has also struggled to keep pace lower at 1.3562.

Data releases

• AUD: MI Leading Index m/m
• NZD: CPI q/q
• JPY: BOJ Monthly Report
• GBP: Claimant Count Change, Unemployment Rate, Average Earnings Index y/y
• EUR: Trade Balance, German 10-y Bond Auction
• USD: PPI m/m, TIC Long-Term Purchases, Capacity Utilization Rate, Industrial Production m/m