Having failed at an attempted move above the 1.04 handle against its US Counterpart overnight Thursday, investors have once again struggled to commit fully to a sustained upward trend. Falling from opening levels around 1.0360 the Aussie dollar reached a late intraday low of 1.0316 weighed down by equity markets which finished flat. Despite its slow start better than expected GDP Figures released from the United States did show the world’s largest economy grew at a pace of two percent in the third quarter. Rallying a full half a cent after the announcement the Australian dollar opens overall stronger this morning at 1.0373. On the outlook this week given a relatively quiet economic calendar it’s unlikely the medium term range of 1.02- 1.04 will be broken ahead of the RBA’s interest rate announcement next Tuesday where investors remain unsure whether a rate cut will be forthcoming.
- We expect a range today of 1.0330 – 1.0400
New Zealand Dollar
The New Zealand Dollar remained in favour amongst investors last week after the Governor of the RBNZ Graeme Wheeler squashed rumours that he would cut interest rates next month whilst also demonstrating he has no intention of intervening in currency markets. Whilst investors still remain attracted to the Kiwi due to its higher yields such a neutral Monetary Policy stance remains at odds when compared to many others including the BOE and RBA. Trading to overnight high of 0.8236 against its US Counterpart, the rally in excess of a half US cent was mainly attributed to a US GDP reading which beat the majority of expectation. Opening at a rate of 0.8225 this morning, short-term support is likely to establish itself around the 0.8180 mark given the lack of local data due for release today.
- We expect a range today of 0.8190 – 0.8250
Great British Pound:
The Great British Pound was weighed down on Friday after BOE officials cautioned against over-optimism following the better than expected economic growth reading released on Thursday. With MPC members still undecided on whether to increase its Stimulus program worth 375 billion-pounds next week the Sterling is likely to remain under pressure until the picture surrounding Monetary Policy becomes a clearer one. Opening this morning spot on 1.6100 against its US Counterpart losses were also witnessed against both the Australian dollar (1.5516) and the New Zealand dollar (1.9559) which both open weaker.
- We expect a range today of 1.5480 – 1.5550
Following a week in which currency direction has been so greatly influenced by a disappointing US corporate earnings season and it comes as a pleasant surprise to see markets return to more traditional signals on Friday. Boosted nicely by better than expected US GDP figures, the world’s largest economy grew in the third quarter by two percent. Keeping in mind US Elections are set to commence on Nov.6, data releases linked to both growth and the labour market will be closely watched by voters with President Obama remaining only a marginal favourite to win what is turning out to a very tight race. Meanwhile in Europe despite a weaker Greenback the Euro managed to do very little trading in a tight range of (1.2881 – 1.2955) against its US Counterpart. Opening this morning at 1.2939 the only happening of interest was the ECB’s endorsement of a planned commission which would have power over the budgets of individual nations, essentially providing further evidence of increased unity.
- AUD: No Data Today
- NZD: No Data Today
- JPY: Retail Sales y/y
- GBP: Nationwide HPI m/m, Net lending to individuals m/m
- EUR: No Data Today
- USD: Personal Spending m/m, Prelim Industrial Production m/m