Risk Appetite bolsters AUD recovery

Australian Dollar:

The AUD rally continued through trade on Wednesday as risk appetite increased and investors repositioned their expectations surrounding U.S monetary policy. Burgeoning risk appetited helped fuel a rebound in oil and commodity prices driving the AUD through 0.72 touching overnight highs at 0.7234. The Australian dollar has been one of the week’s top performers advancing 2 cents since Friday’s close. Poor U.S labour market data extended the timeline of expectation surrounding a change to Federal Reserve Policy and the Reserve Bank of Australia’s decision to maintain the current policy platform into the foreseeable future delayed the expected divergence in policies and inflow of investments into the US bolstering short term demand for both the AUD and emerging market currencies. Resistance on approaches to 0.7250 will need to be broken if a meaningful push toward 0.73 is possible and attentions turn to the FOMC meeting minutes for direction. The Fed’s policy committee were close to ending a near decade long easing program at last month’s meeting and investors will be looking for clues as to the timing of a rate amendment.

• We expect a range today of 0.7080 – 0.7320

New Zealand Dollar:

The New Zealand dollar followed its antipodean counterpart higher through trade on Wednesday advancing though 0.66 U.S cents and touching intraday highs at 0.6647. Buoyed by increased optimism surrounding global growth outlooks and improvement in commodity prices the NZD hit is highest level over 6 weeks. Expectations the RBNZ may delay additional rate cuts coupled with a possible delay in Federal Reserve policy amendments have bolstered demand for the Kiwi as a higher yielding asset. With little domestic data on hand today attentions turn to the FOMC meeting minutes for direction into the weekend.  

• We expect a range today of 0.6480 – 0.6720

Great British Pound:

The Great British Pound continued to recoup losses suffered through the last 2 weeks of September and broke back through the 1.53 handle as Manufacturing and Industrial Production expanded at a faster than expected pace through August. As diverting monetary policy continues to drive direction the Sterling found additional support in ever increasing expectations the FOMC will not adjust US monetary policy until March next year. Attentions today turn to the BoE and its official rate announcement and meeting minutes.    

• We expect a range today of 2.0950 – 2.1350 

Majors:

The Greenback enjoyed a mixed session Wednesday advancing against both the Euro and Swiss Franc but relinquishing gains against emerging market and commodity driven currencies as risk appetite burgeoned on optimism surrounding global economic growth outlooks. Comments from OECD Chief Angel Gurria suggested that while he and the IMF were likely to lower their growth forecasts they still expected stable global economic performance, reiterating that this current slowdown is not indicative of widespread “paralysis”. The comments coupled with accommodative central bank policies boosted investor confidence and fostered a belief that central banks will continue to promote growth driven dogmas. The USD edged lower against the JPY after the BoJ opted maintain its current stimulus plan despite expectations policy makers would increase the current stimulus package. USD/JPY edge below 120 touching 119.76 while EUR/USD moved back below 1.1250. Attentions now turn to the ECB and FOMC meeting accounts for direction and insight into forward policy. There are whisperings the ECB will increase its current QE program and investors will be looking to the minutes for any clue that may suggest action is imminent.  

Data releases:

• AUD: No Data
• NZD: No Data
• JPY: Core Machinery Orders, Current Account Balance, 30 Year Bond Auction, BoJ Monthly Report and Economic Sentiment.
• GBP: BoE Governor Carney Speaks, MPC Official Bank Rate Votes, Monetary Policy Summary, Official Bank Rate and Asset Purchase Facility Announcements and MPC Asset Purchase Facility Votes
• EUR: German Trade Balance, ECB Monetary Policy Meeting Minutes
• USD: Unemployment Claims, FOMC Meeting Minutes and FOMC Member Williams Speaks.