AUD steady in anticipation of Trade Balance and Retail Sales

Australian Dollar:

The Australian Dollar offered little to excite investors through trade on Wednesday holding onto gains earned Tuesday in the aftermath of the RBA rate announcement. Markets largely ignored a soft fourth quarter GDP read that saw the Australian Economy grow just 0.5% as an upward revision to Third quarter growth defused immediate calls for looser monetary policy. The below par print highlighted the economy’s reliance on export lead growth and will likely increase speculators bets for a downward rate adjustment in the coming months. Focus shifts to Retail Sales and Trade Balance reports for direction throughout the domestic session and the impetus needed to keep the AUD above 0.78.

• We expect a range today of 0.7780 – 0.7860

New Zealand Dollar:

Despite a very light economic docket locally yesterday demand for the New Zealand dollar has been bolstered overnight with a disappointing private jobs report from the United States triggering a move away from the worlds reserve currency. With investors remaining focused clearly on offshore central bank developments as well labour market numbers from the US, Greenback direction will be the major driver behind broader NZD/USD moves through to weeks in end. In what’s been a positive overnight session for the Kiwi the New Zealand dollar opens 0.3 percent higher this morning at a rate of 0.7583.

• We expect a range today of 0.7530 - 0.7620

Great British Pound:

Growth in Britain’s dominant services sector contracted last month figures overnight showed with Services PMI of 56.7 comfortably missing the expected read of 57.6. Whilst there were some positive aspects mainly improved signs of wage growth, overall the disappointing read has contributed to a large drop in the value of Great British Pound. Notching up some hefty losses across the board, the Sterling is more than a full cent weaker when valued against the Greenback this morning at 1.5260 whilst also significantly lower when valued against both the Australian dollar (1.9511) and the New Zealand dollar (2.0097). On the horizon this evening investors await rhetoric from the Bank of England where it’s widely expected existing monetary settings will remain in place.

• We expect a range today of 1.9460 – 1.9570

Majors:

The Greenback touched fresh highs when measured against a basket of currencies Wednesday as the dollar index reached levels not seen since September 2003. The USD found support in a strong ADP non-farm employment report leading analysts to believe another NFP print above 200K will be seen Friday. A strong Labour market is crucial for US dollar strength after a string of softer than anticipated macroeconomic indicators throughout February cooled expectations surrounding US growth prospects. A print below 235K in the monthly Non-Farm Payroll report may dampen the Greenback rally as investors are forced to reassess their IR expectations and extend assumptions on the timing of a Central Bank rate adjustment.

In other news the Euro edged lower breaking key technical support levels at 1.11 and opens this morning at 1.1071. Investors looked to shorten positions and reduce their holdings of the 19 nation shared unit in the lead up to the ECB‘s monthly press conference. The European Central Bank is set to announce specific plans for its 1.1 trillion Euro bond buying program an announcement that highlights the dividing and diverging gulf between the US Federal reserve and its European counterparts.

Attentions today will be squarely focused on the ECB as the headline event governing direction through trade on Thursday.

Data releases:

• AUD: Retail Sales, Trade Balance and RBA Deputy Governor Lowe Speaks
• NZD: No Data
• JPY: 30-Year Bond Auction
• GBP: Halifax HPI m/m, Official Bank Rate, Asset Purchase Facility and MPC Rate Statement.
• EUR: German Factory Orders, Retail PMI, French 10 Year Bond Auction, Minimum Bid Rate and ECB Press Conference.
• USD: Unemployment Claims, Revised Non-Farm Productivity q/q, Revised Unit Labour Cost q/q, FOMC Member Williams Speaks and Factory Orders.