Aussie cools off losing ground across the board

Australian Dollar:

The Australian dollar continued Friday’s gains during Asian trade on Monday climbing upwards breaching through the US87 cent barrier. The positive trend came after China moved to unexpectedly cut interest rates late on Friday sending commodity prices higher as the global superpower made an attempt to curb a recent slump in economic growth. Overnight the AUD lost momentum and as European and US markets began to trade the higher yielding currency was sold off. The Aussie slumped as low as 0.8600 against the US and opens this morning just over half a cent weaker at 0.8613. Today all eyes will focus on RBA deputy Governor Lowe’s speech in attempt to gauge hints as to the future direction of Australia’s monetary policy.

• We expect a range today of 0.8570 – 0.8650

New Zealand Dollar:

The New Zealand dollar followed its cross Tasman counterpart higher against the Greenback on Monday continuing to make gains after China cut rates late on Friday. The shift upwards comes after commodity prices strengthened, underpinned by the aggressive monetary policy move being viewed in a positive light for the exporting nation. Overnight the upswing could not hold and the Kiwi was sold off amidst Greenback strength. Reaching lows of 0.7847 the NZ dollar struggled to remain steady ahead of US GDP numbers being released tonight. The higher yielding currency opens this morning at 0.7861 as today’s inflation expectations will take centre stage as investors look for direction.

• We expect a range today of 0.7820 – 0.7900

Great British Pound:

The British Pound performed against a basket of major currencies to begin the week rallying on market sentiment in a session of trade void of any local or high impact offshore data. The Sterling improved after sinking amid further European stimulus discussions gaining over half a cent against an overstretched Greenback to open this morning at 1.5704. In a similar trend the GBP was bolstered against the higher yielding currencies gaining against the AUD(1.8235) and NZD(1.9976) overnight. The Aussie and Kiwi strengthened late last week as China moved to unexpectedly cut interest rates sending commodity prices higher, however ran out of steam on Monday when European trade began. Tonight all eyes will be on mortgage approvals and inflation numbers before the markets witness GDP numbers on Wednesday. 

• We expect a range today of 1.8195 – 1.8275

Majors:

The US dollar cooled off during Monday’s trade and with no strong local data to help with direction the Greenback was at the mercy of offshore numbers. The Euro took advantage of the situation and impressive figures out of Germany saw the EUR break out of its recent slump to rally against the safe haven currency. The Euro moved to highs of 1.2443 as the German Ifo Business climate showed a strong improvement after a long stretch of disappointing releases. The surprising data will cool down the markets expectations of the European central bank implementing further stimulus policies immediately and further economic print will be watched closely. All eyes tonight will be firmly on the US and Germany’s growth numbers for guidance.

Data releases: 

• AUD: RBA Deputy Gov Lowe Speaks
• NZD: Inflation expectations q/q
• JPY: Monetary Policy Meeting Minutes, SPPI y/y, BOJ Gov Kuroda Speaks
• GBP: BBA Mortgage Approvals, Inflation Report Hearings
• EUR: German Final GDP q/q, Italian Retail Sales m/m
• USD: Prelim GDP q/q, Prelim GDP Price Index q/q, HPI m/m, S&P/CS Composite-20 HPI y.y, CB Consumer Confidence, Richmond Manufacturing Index