Dollar holds ahead of RBA

Australian Dollar:

The Australian dollar moved marginally higher in what was a quiet start to the week for local traders. Spending all of the past 24 hours above the 93 US Cents handle, trading ranges tightened considerably on Monday with the Aussie confined to the parameters of 0.9307 on the bottom side and 0.9330 on the top side. Given the lack of movement, emphasis is clearly being placed on today’s release of minutes from the Reserve Banks August meeting where the board kept rates on hold at 2.5 percent. Whilst traders will be wary of any underlying dovish tone from the Central Bank given the recent spike in unemployment, despite the RBA’s pledge for “interest rate stability” bets have risen that if economic conditions deteriorate rates may remain lower for longer. Opening at a familiar level this morning the Aussie currently buys 93.25 US Cents.  

• We expect a range today of 0.9290 – 0.9360

New Zealand Dollar:

Given the light domestic economic calendar which has offered little, the focus yesterday was very much on what lies ahead with investors opting to sit on their hands ahead of the upcoming Fonterra Group online diary auction which kicks off in the US this evening. With all eyes on the prices of New Zealand’s biggest export commodity, any additional falls from existing levels would provide further selling motivation for those investors currently holding long NZD positions. In further developments which promise to capture the markets attention today the New Zealand government is scheduled to release its latest treasury forecasts including inflation expectations. Opening slightly weaker this morning the Kiwi currently swaps hands at a rate of 0.8475.

• We expect a range today of 0.8440 – 0.8510

Great British Pound:

The Great British Pound opens virtually unchanged when valued against its US Counterpart this morning at a rate of 1.6726. Trading only 10 basis points either side of this level on Monday there was very little on offer to help establish direction yesterday with broader equity markets (FTSE All-Share Index added 0.8%) providing only weak support. Suggesting this may well be the calm before the storm heightened price action is expected over the coming days, starting this evening where its expected figures will show Consumer Price inflation remains below the official BOE target of 2 percent. Stronger against the Kiwi this morning at a rate of 1.9721 the Sterling is lower against the Aussie at 1.7934.

• We expect a range today of 1.7900 – 1.7980

Majors:

US Stocks rose as did the US dollar during overnight trade as tensions eased over ongoing global conflicts during what proved to be a far from inspiring session. Assisting the Greenback US homebuilding data rose in August to its highest level in seven months according to a sentiment measure as investors now wait on Inflationary numbers (tonight) followed by the Jackson Hole Summit on Thursday where Janet Yellen and leading economists will meet to discuss the outlook for the economy and monetary policy. In currency moves overnight the US dollar strengthened marginally against the Yen (102.550), whilst more notably against the Euro (1.3362) ahead of key growth indicators later in the week, indicators which may well put further pressure on the ECB to ramp up stimulus measures.

Data releases

• AUD: Monetary Policy Meeting Minutes
• NZD: PPI Input q/q, PPI Output q/q
• JPY: No data today
• GBP: CPI y/y, PPI Input m/m, RPI y/y
• EUR: No data today
• USD: Building Permits, CPI m/m, Core CPI m/m, Housing Starts