Aussie stronger against a weaker Greenback

Australian Dollar:

The Australian dollar maintained its skittish mood last week, trading in more than a two and half cent range when valued against its US Counterpart. Gyrating between a low of 0.7589 and a two week high of 0.7845 the majority of the swings came off the back of Wednesday’s Federal Reserve meeting which saw Policy makers remove the term “patient” when referencing their approach to monetary tightening. Hinting that the first hike may come in June, overall the broadly dovish outlook has been AUD supportive. During a week dominated by US Fed talk, Greenback direction has been the key driver ahead of domestic fundamentals as a manufacturing index from China tomorrow appears to be the Aussies next major hurdle. Opening significantly stronger this morning the Australian dollar currently buys 77.71 US Cents

• We expect a range today of 0.7730 – 0.7810

New Zealand Dollar:

The New Zealand dollar was one of the biggest gainers versus the Greenback towards the back end of last week as investors across the board flushed out their net long USD positions. In the wake of the Federal Reserve’s decision to cut their estimate of year end funding rates, Janet Yellen was also keen to point out that the removal of the term patient didn’t signal they would be impatient when considering the move to higher ground. Having reached a high overnight on Friday of 0.7590 when valued against it US Counterpart the New Zealand dollar opens this morning a staggering one a half cents stronger than Friday morning at a rate of 0.7562.

• We expect a range today of 0.7520 – 0.7600

Great British Pound:

Vaulting above the psychological level of 7000 points for the first time in history the FTSE 100 Index rose 0.9 percent on Friday. Buoyed by a clearer global monetary outlook as well as a broadly weaker US dollar the Great British Pound stretched its legs on Friday notching up gains worth two US Cents when valued against the world’s reserve currency. Whilst stronger against the Greenback at 1.4951 the Sterling has been unable to keep pace with the Australian dollar (1.9226) and the New Zealand dollar (1.9770), opening lower against both. Whilst ranges are expected to solidify over the coming 24 hours the Sterling’s next major hurdle lies in tomorrow night’s CPI result.

• We expect a range today of 1.9170 – 1.9280

Majors:

It was all about the Federal Reserve’s hiking schedule last week, a focus which resulted in the world’s reserve currency being pulled back in dramatic fashion. With the US Dollar Index having reached its highest ever level since 2004 earlier in the month, the Greenback suffered its biggest weekly drop since 2011. A move triggered purely on Fed speculation which reinforced the view that whilst there has been further clarity over the timing of the first hike, the gradient of the longer term yield curve remains very much undecided. Against the Yen the US dollar lost 1.1 percent overnight on Friday opening weaker this morning at a rate of 120.008, meanwhile the Euro has flourished racing to a high of 1.0881 before settling at a rate of 1.0813. Looking forward to the week ahead, broader themes focused around policy divergence remain well intact with bailout talks in Greece also likely to be prioritised. In the US key data pieces include CPI, housing data and GDP.   

Data releases

• AUD: No data today
• NZD: No data today
• JPY: No data today
• GBP: No data today
• EUR: CBI Industrial Oder Expectations
• USD: Existing Home Sales