Aussie resilient in Face of European debt woes

Australian Dollar:

The Australian dollar found support throughout domestic trade on Wednesday on the back of stronger than anticipated building approvals. The 2.4% jump through May helped the Aussie hold onto overnight gains above 0.77 yet struggled to push the commodity driven unit through resistance at 0.7730. The AUD was then forced lower as stronger than anticipated US preliminary Non-farm payroll numbers heightened expectations tonight’s official print will point to a strengthening labour market increasing the likelihood of a Fed rate hike before years end. Touching lows of 0.7637 we open marginally higher this morning buying 0.7645 US cents. The Australian Dollar has shown a remarkable resilience in the face of unnerving global uncertainty in what would ordinarily prompt a risk-off bailout. The higher yielding AUD remains an attractive prospect for cash leaving the Euro and until a clear path emerges for cash strapped Greece we expect the AUD to maintain recent ranges with an underlying bearish tone should sentiment shift.

• We expect a range today of 0.7580 – 0.7730

New Zealand Dollar:

The downward pull on the NZD continued through trade on Wednesday as a dip in the Global Dairy Trade Index and upbeat U.S macroeconomic data forced the Kiwi through 0.6750 to intraday lows of 0.6723. The overnight dip marks a fresh 5 year low and leaves the dairy driven unit open to further bearish sentiment as risk off trade envelopes the wider economy amidst the unfolding Greek debt crisis. Attentions now turn to U.S nonfarm payroll numbers as investors look for a strong read to support a September Fed rate adjustment.

• We expect a range today of 0.6630 – 0.6810

Great British Pound:

The Great British Pound suffered at the hands of stronger than expected US data and a fall in domestic manufacturing PMI edging downward throughout trade on Wednesday. While still expanding Manufacturing PMI unexpectedly fell from 51.9 to 51.4 in June and forced cable off intraday highs at 1.5720. Losing some 130 points throughout the European and North American trading sessions Sterling opens this morning marginally higher at 1.5620. Attentions remain squarely focused on the unfolding Greek debt crisis with Construction PMI offering domestic macroeconomic direction.

• We expect a range today of 2.0300 – 2.0525 

Majors:

The Euro edged marginally lower across the board Wednesday with markets adopting a wait and see approach as events unfold ahead of the critical Greek referendum on Sunday. The 19 nation single currency fell below 1.11 to touch intraday lows at 1.1042 after Greek Prime Minister, Alexis Tsipras, urged voters to rebuff current bailout terms. The address came just 24 hours after Tsipras delivered a conciliatory letter to creditors pleading for a new bailout package wherein Greece would agree to most but not all financier demands. The back flip exemplifies the current predicament facing Tsipras and his leftist government and when coupled with the initial call for a referendum only highlights desperate lengths Greece has been forced to pursue in a bid to regain sovereign control of their countries finances. In macroeconomic news the Greenback rallied on the back of stronger than anticipated data bolstering expectations the Fed will hike rates before years end. Preliminary non-farm payroll numbers surpassed expectations paving the way for a strong print this evening where analysts anticipate 237,000 new jobs will have been added to the economy through June. Coupled with an uptick in manufacturing and construction spending the dollar index climbed nearly 1 percent to 96.32 as attentions turn to a heavy economic docket headlined with critical US labour market data.  

Data releases:

• AUD: Trade Balance     
• NZD: ANZ Commodity Prices m/m
• JPY: Monetary Base y/y and 10 Year Bond Auction
• GBP: Nationwide HPI m/m and Construction PMI
• EUR: Spanish Unemployment Change, French and Spanish 10 Year Bond Auctions, PPI m/m, ECB Monetary Policy Meeting Minutes and ECB President Draghi Speaks.
• USD: Non-Farm Employment Change, Unemployment Rate, Average Hourly Earnings, Unemployment Claims and Factory Orders.