Concerns linger ahead of China's return

AUD / USD

Expected Range: 0.7040 - 0.7150

In what proved to be another bumpy ride for investors last week, US and European markets rallied strongly on Friday boosting demand for financial and mining stocks. Despite the market’s ability to snap a five day losing streak, global stock markets will remain front and centre over the coming hours as China re-opens this morning following their week long new-year celebration. During a period jam packed with key risks events, tomorrow’s release of monetary policy minutes will kick start the domestic economic focus ahead of Thursday’s labour market report. Opening this morning steady at a rate 0.7101 when valued against its US Counterpart interim resistance is likely to once again kick in at 0.7150 followed by support closer to the 70 US Cents handle

NZD / USD

Expected Range: 0.6580 - 0.6660

Despite improved risk flows amid a handful of better than expected data releases from the world’s largest economy on Friday, the New Zealand dollar opens weaker this morning, unable to keep pace with a notably stronger Greenback. Whilst the broader market environment is still engulfed by fear, investors are bracing themselves this morning, amid concerns Chinese participants will trigger a “catch up” sell off, given the closure of their markets last week. As investors continue to weigh on the broader implications of the markets most recent rout, the start of 2016 to date has been dominated by a flight to safety ahead of a focus on returns. Opening lower this morning the New Zealand dollar currently buys 66.20 US Cents.  

GBP / AUD

Expected Range: 2.0360 - 2.0450

Trading in a broad two and a half cent range when valued against its US Counterpart last week, the Sterling has fluctuated wildly across forex markets. In the wake of a dovish Bank of England, a severe shortage of supportive economic prints has also taken its toll with sentiment moves dominating once more currency flows over the past five day window. In what’s likely to continue today, domestic CPI figures tomorrow followed by Wednesday’s employment report should provide investors with a more solid backdrop to make fundamental buying decisions. Opening marginally stronger versus the Greenback at a rate of 1.4498, the Sterling opens stronger also versus both the Australian dollar (2.0402) and the New Zealand dollar (2.1870).  

USD, EUR, JPY

Despite a strong finish to the week which favoured the US dollar, overall the past five days has not been kind to the world’s reserve currency which tumbled versus the Japanese Yen as well as versus other major counterparts. In light of positive economic reads from The United States on Friday which came in the form of a surprise 0.2 percent monthly increase in retail sales, upbeat data prints suggest that the markets most recent sell-off may have gone too far whilst turmoil and fear remain a greater motivator to sell than does growth to buy. With Chinese traders returning from Lunar New Year Holidays today, further fireworks certainly remain a possibility given China over past six weeks has set the pace and tone for the rest of the world to follow. Over the coming 24 hours, sentiment associated with China’s return will be critical as broader implications for policy makers form part of a more medium-term focus when evaluating currency flows. Stronger against the Yen at 113.170 the Greenback is also higher against the Euro at 1.1241.     

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