AUD stronger ahead of notable Greenback test

Australian Dollar:

The Australian dollar rallied when valued against its US Counterpart late yesterday afternoon after figures showed China’s industrial profits had grown by 0.4 percent over the past 12 months. Reaching an overnight high of 0.8880 a slightly weaker Greenback has also played its part after a separate report showed the orders for durable goods fell by 1.3 percent in September. In what’s been an overall positive start to the week, solid support has now been established up above the 0.8750 mark with investors looking to break new ground up above established resistance levels of 0.8900. Opening stronger this morning at a rate of 0.8860 all eyes will be on the Federal Reserve’s two day meeting which commences this evening.  

• We expect a range today of 0.8820 – 0.8900

New Zealand Dollar:

There has been further upside momentum for the New Zealand dollar during overnight trade with the Kiwi reaching highs of 0.7957 when valued against its US Counterpart. Rallying a full half a cent from opening levels disappointing US durable goods numbers have weighed on the growth outlook for the world’s largest economy notably dampening demand for the US dollar. With the ANZ Business Confidence Index likely to provide some price direction when released at 11am this morning heightened volatility is expected this evening leading into the Federal Reserve two meeting. Opening stronger this morning the New Zealand dollar currently buys 79.26 US Cents.  

• We expect a range today of 0.7880 – 0.7950

Great British Pound:

The Great British Pound has accumulated 50 basis points worth of gains when valued against its US Counterpart overnight assisted by a strong performance across equity markets as well as a softer US Dollar. Whilst the FTSE 100 Index advanced 0.6 percent there were very few macro developments on offer to provide direction with the Sterling very much at the mercy of broader Greenback moves. Opening weaker against both the Australian dollar (1.8206) and the New Zealand dollar (2.0349) speeches by several MPC members over the next two days coupled with the Federal Reserve’s meeting both promise to have a profound impact especially given the notional USD long positioning of many speculators.

• We expect a range today of 1.8170 – 1.8240

Majors:

US Stocks have rallied overnight buoyed by strong corporate results as well as a consumer confidence read which rose in October to a seven month high. Whilst confidence levels have improved off the back of lower gasoline prices and enhanced job security a separate report did show durable goods orders unexpectedly fell in September. With the net result being a lower US dollar the Euro opens stronger by comparison at a rate of 1.2733 whilst the Yen is lower at 108.118. Commencing this evening the Federal Reserve’s two day meeting promises to garner added attention given the expectation that monthly bond-purchases would be wrapped up marking an end to the quantitative easing era. Furthermore in minutes released last month Policy makers did express concerns that US growth may be at risk given offshore weaknesses heightening concerns that the timeframe for higher interest rates may well be pushed out further.  

Data releases

• AUD: No data today
• NZD: ANZ Business Confidence
• JPY: Prelim Industrial Production m/m
• GBP: Net Lending to Individuals
• EUR: No data today  
• USD: FOMC Statement, Federal Funds Rate