Dovish ECB forces Euro lower

AUD / USD

Expected Range: 0.7420 – 0.7520

The Australian dollar continued its upward ascendency when valued against its US Counterpart yesterday, breaking through the 75 US Cents mark for the first time in weeks. Whilst struggling to maintain levels up above this critical threshold the past 24 hours have been defined by an upbeat mood across domestic and global equity markets after the S&P 500 posted its best day since the US election. Whilst a roaring iron ore price has also lit a fire under those currencies closely linked to the commodities spectrum, given today’s economic calendar is looking thin the Aussie remains set to potentially enjoy a short period of consolidation. Opening stronger versus the Greenback the Australian dollar currently buys 74.57 US Cents.

 

NZD / USD

Expected Range: 0.7120 – 0.7230

Spurred on by improved risk flows, sentiment surrounding the global growth outlook was given a boost overnight after the ECB announced that it would look to taper quantitative easing efforts come next April. Whilst looking to extend its accommodative stance through to the end of this year before winding back, overall confidence levels have been high over the past 24 hours, a position clearly visible given the performance of equity markets. Having traded as high as 0.7223 when valued against its US Counterpart the Kiwi currently buys 71.76 US Cents.

 

GBP / AUD

Expected Range: 1.7450 – 1.7650

The Great British Pound suffered a second consecutive daily depreciation through trade on Thursday as investors looked to the USD and US denominated assets following the ECB’s surprise QE extension. Despite rallying one percent against the 19 nation shared unit Sterling fell back through 1.26 and touched intraday lows at 1.2552 when valued against the worlds base currency. Cable came under continued pressure following a parliamentary vote backing Prime Minister May’s Brexit timetable and proposed March exit disappointing those investors that hoped Brexit may be delayed. Attentions turn now to next week’s CPI inflation report and wage growth numbers as key macroeconomic markers governing direction while further Supreme Court commentary surrounding the Governments right to invoke article 50 without parliamentary assent dominates investor focus through the rest of this week.

 

USD, EUR, JPY

policy statement from ECB President Mario Draghi. The European Central Bank surprised markets by extending its bond buying program through 2017 and confirming that reductions to the size of monthly bond purchases are not to be viewed as tapering but merely a means of keeping borrowing costs lower for longer. The announcement keeps the ECB in the market much longer than anticipated and affirms the Bank’s commitment to quantitative easing and looser monetary policy. The Euro plunged some 250 points collapsing through 1.08 and 1.07 to touch intraday lows at 1.06 as investors rushed to square positions and buy back into U.S treasury yields. With the Federal Reserve widely expected to raise rates next week yesterday’s ECB announcement only serves to highlight the widening gap between central bank policy outlooks. With little of note on today’s domestic docket investors will be largely focused on monitoring positions ahead of the FOMC policy announcement chasing any indications of how many rate increases may be proffered throughout next year.