Aussie collapses on soft first quarter inflation

AUD / USD

Expected Range: 0.7480 - 0.7680

The Australian dollar suffered a precipitous collapse through trade on Wednesday after a quarterly inflation report fell well short of market expectations. Both CPI and Trimmed Mean CPI both fell sharply throughout the first quarter of 2016 fueling suggestions the RBA may need to revisit its neutral monetary policy platform in a bid to stimulate prices. The Aussie plunged through 0.77 and 0.76 before leveling out ahead of the FOMC rate statement and policy announcement. The somewhat hawkish Fed commentary helped cap USD losses and forced the Aussie lower still touching intraday lows at 0.7552. Marking its biggest single day correction this year the AUD lost more than 200 points having opened marginally above 0.7750 and left investors and traders scrambling to protect losses. Opening this morning buying 0.7599 US Cents attentions now turn to the BoJ for central bank stimulus and US GDP numbers for macroeconomic direction. 

NZD / USD

Expected Range: 0.6810 - 0.7010

The New Zealand Dollar edged lower through trade on Wednesday as investors looked to pare positions ahead of key central bank policy announcements from the FOMC and RBNZ. A somewhat more hawkish Federal Reserve helped push the Kiwi to intraday lows at 0.6810 before the Reserve Bank elected to refrain from additional rate cuts and left the Overnight Cash Rate unchanged at 2.25%. With markets evenly divided leading into this morning’s rate decision there was plenty of scope for movement and the Kiwi jumped higher rallying almost 100 points in the immediate aftermath and punching back through 0.69. Attentions now turn to the BoJ for further central bank action and US GDP numbers for macroeconomic direction. 

GBP / AUD

Expected Range: 1.8950 - 1.9350

The Great British Pound edged lower through trade on Wednesday relinquishing gains above 1.46 and touching intraday lows at 1.4491. Stable Preliminary GDP numbers did little to drive direction as investors pared positions, taking profit ahead of the FOMC’s rate statement and policy announcement. The somewhat hawkish undertone helped fuel an immediate Greenback rally but as wider USD direction remained largely unchanged the GBP stabilised and opens this morning buying 1.4537. With little domestic data on hand to drive direction attentions today turn US macroeconomic data for guidance. 

USD, EUR, JPY

The Greenback edged marginally lower throughout trade on Wednesday following a Federal Reserve statement that reiterated the Monetary Policy committee’s commitment to patient policy changes. As expected the FOMC left rates unchanged however the eradication of specific references to global economic headwinds from its accompanying statement added a somewhat more hawkish flavour and left the door open for a possible policy adjustment come June. While capping modest losses for the world’s base currency the commentary and rhetoric did little to change the wider dollar direction and investors are still looking to September for policy action with a possible second hike come December. The Euro touched 6 day highs against the Greenback at 1.1361 while the USD edged higher against the Japanese Yen. Touching session highs at 111.75. Investors were wary of pushing USD/JPY positions ahead of the Bank of Japans policy announcement and rate statement today. Whisperings the Central Bank will look to expand its current stimulus package have dampened demand for the safe haven Yen and investors will be keenly attuned to the decision and commentary that accompany the BoJ monthly meeting.