Investors keen to forget May

Australian Dollar:

In what was its worst month in over a year the Australian dollar shed 7 cents against its US counterpart during May. Touching lows of 0.9547 on Friday investors continued their move away from the higher yielding asset with softer data flows from both the US and Europe weighing heavily on general risk sentiment. Receiving a mild boost over the weekend China’s official Manufacturing PMI reading rose to 50.8 in May from 50.6 in April, raising optimism that the world’s second largest economy may be stabilising. In what is shaping up as a critical week for the Australian dollar interim support at the 95 US cents level will be its first test with Retail Sales expected to be released today followed by the RBA’s interest rate decision tomorrow. Meanwhile this morning the Aussie dollar is lower by half a cent as it buys 96.01 US Cents.

We expect a range today of 0.9570 – 0.9640

New Zealand Dollar

Despite figures which showed manufacturing activity accelerated in China during the month of May the New Zealand dollar was sold off in a big way late last week unable to keep pace with the stronger US currency. Falling from opening levels of 0.8074 down to 0.7946 it appears the RBNZ are getting what they wished for given the New Zealand dollar has lost around six percent this month. Given the local bank holiday today, data flows from China over the coming 24 hours will continue to be the focus with choppy conditions expected given reduced liquidity. This morning the Kiwi buys 79.52 US Cents

We expect a range today of 0.7920 – 0.7980

Great British Pound:

Whilst currency markets in general remained volatile late last week the Sterling did very little over the course of Friday’s session trading between a range of 1.5139 – 1.5239 against its US counterpart. With weakness on Wall Street pushing the US dollar higher traders still appear confused as to whether they should buy or sell given in theory weaker data flows usually translate to increased stimulus bets and hence a lower currency. With signs of an economic recovery within the UK being accelerated by the volume of net lending to individuals in May the Sterling opens unchanged this morning at 1.5200. Against the Aussie (1.5825) and the Kiwi (1.9102) however the Sterling is significantly stronger.

We expect a range today of 1.5790 – 1.5860

Majors:

Amid speculation the world’s largest economy is strengthening the US dollar continued its rally throughout May spurred on by employment gains, consumer confidence as well as optimism the US Federal Reserve will scale back its 85 billion a month in bond purchases. Pushing US treasury yields higher the re-allocation of funds back into the US has been significant, assisting the Greenback which has appreciated by an average of 3.3 percent against its major peers. In a generally mixed session on Friday US consumer sentiment came in above expectation as did Chicago PMI whilst personal spending in May contracted by 0.2 percent. Remaining in a relatively tight trading band the USD/JPY continues to give the impression that a short-yen position is starting to get a little tired as the dollar opens lower against the Yen this morning at 100.477. Jumping across to Europe overnight and the influence of a stronger Greenback was also easy to see with the Euro slumping in comparison to a late week low of 1.2943. Weighed down following the release of unemployment figures which showed joblessness remained elevated at a staggering 12.2 percent, the backdrop of stagnant growth only adds to the gloomy outlook for the 17-nation bloc. Meanwhile this morning the Euro opens lower at 1.2992

Data releases

AUD: AIG Manufacturing, Retail Sales m/m, ANZ Job Advertisements m/m, Company operating profits q/q
NZD: Bank Holiday
JPY: Capital Spending y/y
GBP: Manufacturing PMI
EUR: Italian manufacturing PMI
USD: ISM Manufacturing PMI