US growth favours a stronger Greenback

Australian Dollar:

In the latest capex expenditure survey published yesterday, business investment within Australia continued to sharply contract during the second quarter of this year. With June quarter investments dropping by 4 percent, the annualised fall now exceeds 10 percent. Despite the subdued outlook yesterday’s headline numbers were marginally better than forecast playing a broadly supportive role to the Australian dollar. Having now bounced from the fresh six year lows witnessed earlier in the week, market conditions have calmed somewhat over the past two days of trade allowing the Australian dollar to consolidate within its new established range of 0.7050 – 0.7200 versus its US Counterpart. Opening stronger this morning at a rate 0.7171, near term direction is once again likely to be dictated by broader US dollar moves.

• We expect a range today of 0.7080 – 0.7210

New Zealand Dollar:

The US economy has demonstrated signs of growing momentum during overnight trade with pending home sales, weekly unemployment claims and pending home sales data all beating consensus forecast. Despite a stronger Greenback the New Zealand dollar has also enjoyed a notable uptick off the back of improved risk flows as China’s equity markets stemmed a five day drop and oil soared. Trading to a 24 hour high of 0.6489 when valued against its US Counterpart the New Zealand dollar opens more than two cents above its weekly low as is currently swaps hands at a rate of 0.6465.

• We expect a range today of 0.6420 -0.6520

Great British Pound:

Trading down to important support levels at 1.5370 when valued against its US Counterpart the Great British Pound has once again struggled to keep its head above water over the past 24 hours. Opening more than a half a cent lower at a rate of 1.5405 a late week push back into the US dollar has hurt the Sterling as investors continue to wait on updated guidance from the BOE. In a panel discussion titled “Global Inflation Dynamics” which is set to kick off tonight in Jackson Hole as part of the 2015 Economic-Symposium, all eyes and ears will be attuned given the attendance of many global central bank heads, including BOE governor Mark Carney.  Lower across the board this morning the Sterling has also lost ground when valued against the Australian dollar (2.1480) and the New Zealand dollar (2.3824).

• We expect a range today of 2.1400 – 2.1580

Majors:

US Stocks have continued to track higher during overnight trade, posting their biggest two day rally since 2009. Strongly assisted by a number of strong headline economic readings overnight, data showed US gross domestic product rose at an annualised pace of 3.7 percent, up 2.3 percent during the second quarter of this year. Whilst a separate report also showed the sale of previously owned homes climbed by 0.5 percent in July, weekly unemployment claims declined to a three month low. In a glowing endorsement for the world’s largest economy, last night’s data re-affirms the view that domestic growth is strong enough to withstand the Fed’s first interest rate hike since 2006. With the only real concern now surrounding the lack of domestic inflation as well as offshore weakness, a spike in volatility to levels similar to what was experienced earlier in the week also threaten to derail fed plans to lift rates. In a session favouring the world’s reserve currency the US dollar is stronger against the Japanese Yen (120.975) and the Euro (1.1249).

Data releases

• AUD: No data today
• NZD: No data today   
• JPY: Household Spending y/y, Tokyo Core CPI y/y, retail sales y/y
• GBP: Second Estimate GDP q/q, Prelim Business Investment q/q  
• EUR: German Prelim CPI m/m, Spanish Flash CPI y/y
• USD: Goods Trade Balance, Personal Spending m/m, Revised UoM Consumer Sentiment, Jackson Hole Symposium