Global jitters weigh on Aussie

Australian Dollar:

The Australian dollar starts the new week under renewed pressure amid ongoing concerns which surround China’s medium term growth trajectory. Clinging to the 73 US Cents level this morning having dropped as low as 0.7284 last week, worries of China’s economic slowdown deepened on Friday after a private survey showed the factory sector contracted at its quickest pace in over six years during August. Acknowledging there remains several key and overriding themes in play, the short-term focus is likely to remain on China as investors look towards policy makers to right an increasingly wobbly looking ship. With the next 24 hour window likely to remain relatively choppy, the heavy sell offs witnessed across global equity markets on Friday may well continue to weigh on growth and commodity linked currencies again today.

We expect a range today of 0.7260 – 0.7340

New Zealand Dollar:

The New Zealand dollar did well to maintain its value versus its US Counterpart late last week with significant economic unknowns lurking just under the surface. Whilst currency flows have broadly favoured the world’s deepest and safest pockets during a period heightened instability, conditions will need to significantly calm if the Kiwi is to enjoy an extended upward breakout. Headlining the markets most recent decline, the yuan’s depreciation mixed with softer macro numbers have intensified concerns, adding fuel to an already negative outlook. Opening stronger at a rate of 0.6678, the Kiwi’s trajectory today will remain highly dependent on broader risk flows as sentiment currently remains far from positive.

We expect a range today of 0.6620 – 0.6740

Great British Pound:

Whether speeches from both the US Federal Reserve and Bank of England this week narrow the race towards who will normalise monetary settings first, underlying interest expectations remain at the heart of the Sterling’s value over the medium term. Whilst stronger CPI numbers last week favoured going long GBP, a GDP report later this week is also expected to be relatively upbeat, showing an expansion of 0.7 percent during the second quarter. Opening more than a full US Cent above last week’s low of 1.5562, the Sterling is steady against the Greenback (1.5688), stronger against the Aussie (2.1452) whilst lower versus the Kiwi (2.3450).

We expect a range today of 2.1380 – 2.1510

Majors:

US equity markets plummeted last week, recording some of their largest losses since 2011. Amid worries over a stronger dollar and a plunge in oil prices, strong corporate earnings in the short-term will be required to see broader valuations remain intact. During a period where investors continue to speculate over the timing of a US Fed rate hike, worries over China’s economic outlook also remain at the heart of the markets most recent surge in volatility. In moves which have favoured the Japanese Yen, it’s been an interesting few days of trade in which risk aversion hasn’t significantly strengthened the US dollar in line with Fed take off uncertainty. Opening lower when valued against the Yen at (122.02), the euro has also struggled for immunity, shedding more than one US Cent, lower at 1.1240.