AUD moves lower on uncertain outlook

Australian Dollar:

Minutes from the Reserve Banks August meeting were released yesterday confirming the intentions of policy maker to hold interest rates firm despite the growing degree of uncertainty which now surrounds the domestic growth outlook. Whilst the minutes flagged the household sector as being the most vulnerable, overall Glenn Stevens tone didn’t diverge too much from the consensus view. Initially moving higher on Tuesday the Australian dollar touched a high of 0.9343 when valued against its counterpart before being sold off during overnight trade. Opening weaker this morning at a rate of 0.9300 today’s focus will be similar one given Mr Steven’s is due to testify before The House of Representative Standing Committee on Economics in Brisbane this morning.    

• We expect a range today of 0.9270 – 0.9340

New Zealand Dollar:

The New Zealand dollar has been sold off in an a big way over the course of the past 24 hours with the initial move lower triggered by revised economic forecasts which saw the government trim its expected budget surplus for 2015 whilst also reducing their near-term growth and inflation outlooks. Increasing the likelihood that the RBNZ may look to move their interest rate settings back into neutral territory, last nights’ global diary auction also succeeded in providing fireworks after dairy prices slipped to their lowest level in more than two years. Tumbling from an opening level of 0.8476 the only positive for the New Zealand dollar is that the critical support level of 84 US Cents did hold with the Kiwi opening notably weaker this morning at a rate of 0.8413 when valued against the Greenback.

• We expect a range today of 0.8380 – 0.8450

Great British Pound:

Suggesting The Bank of England may now have additional scope to keep record low interest rates in place for longer figures overnight showed UK inflation had cooled further falling to 1.6 percent in July, down from 1.9 percent in June. With broader price pressures remaining subdued, last night’s inflation number marked the seventh consecutive month in which CPI has remained under the BOE’s target. Triggering a notable sell off the Great British Pound fell from an earlier high of 1.6727 when valued against its US Counterpart to open weaker this morning at a rate of 1.6615. In other moves the Sterling is weaker against the Aussie (1.7861) whilst stronger against the Kiwi (1.9744)   

• We expect a range today of 1.7830 – 1.7890

Majors:

The US dollar has appreciated during overnight trade after economic data pointed towards a strengthening economy whilst broader inflation remained the below the Federal Reserve’s official 2 percent target. Assisting the Greenback, Housing Starts reached their highest level in eight months whilst inflation during July showed the cost of living only trickled higher by 0.1 percent, its smallest increase since February. Shining additional light on the Federal Reserve’s existing stance, minutes from their last gathering are due to be released this evening ahead of the Jackson Hole Summit starting on Thursday where Janet Yellen and leading economists will meet to discuss forecasts and monetary policy. Stronger against the Yen this morning at a rate of 102.91 the Greenback is considerably stronger when valued against the Euro (1.3320) as investors await additional economic indicators towards weeks end.

Data releases

• AUD: MI Leading Index m/m
• NZD: No data today
• JPY: No data today
• GBP: MPC Asset Purchase Facility Votes, MPC Official Bank Rate Votes, CBI Industrial Order Expectations
• EUR: No data today
• USD: FOMC Meeting Minutes