AUD does well to hold its ground

Australian Dollar

Having reached a late session high of 0.8800 when valued against its US Counterpart yesterday the Australian dollar has done very well to consolidate the majority of its gains this morning. Opening 0.4 percent stronger at a rate of 0.8781 yesterday’s gains were made even more impressive given China’s HSBC Final Manufacturing PMI fell short of expectation notching up a reading of 49.5. Whilst domestic figures also showed the sale of new homes shrank by 0.4 percent last month, in what has been a tumultuous week for broader financial markets despite its strong form overnight broader term weakness for growth linked currencies like the Australian dollar remains almost inevitable as Central Banks globally continue their shift towards a tighter monetary stance. 

• We expect a range today of 0.8740 – 0.8810 

New Zealand Dollar

Given markets had priced in a 50 percent chance New Zealand’s central bank would cut interest rates yesterday, not surprisingly the decision by policy makers to keep the benchmark rate unchanged at 2.5 percent triggered a notable move lower for New Zealand’s dollar. Having reached an earlier high of 0.8217 when valued against its US Counterpart, post announcement the Kiwi slumped to a low of 0.8124. While the RBNZ did not deliver on the rate cut many had expected Governor Graeme Wheeler did say he expects the Central bank to start their upwards adjustments soon which would be make the RBNZ the first central bank amongst the developed world to do so. In what’s likely to trigger further price action for the Kiwi this morning investors will now turn their eye’s to Trade Balance figures due for release shortly. Weaker presently the Kiwi currently buys 81.42 US Cents.

• We expect a range today of 0.8100 – 0.8180

Great British Pound:

The Great British Pound has declined for a third day versus the dollar with monetary policy settings across both nations having a profound impact on the strength of their underlying currencies. Keeping in mind Federal Reserve policy makers tightened their monetary stance overnight on Wednesday this has been contrasted by Mark Carney’s pledge to keep interest rates at a lower level for longer. Whilst lower this morning at a rate 1.6481 the Sterling still has the longer-term ability to control its own destiny with its strength strongly aligned by the ongoing performance of Britain’s economy. Broadly weaker across the board The Great British is significantly lower against both the Australian dollar (1.8764) and the New Zealand dollar (2.0232).

• We expect a range today of 1.8730 – 1.8810

Majors:

In line with the US Federal Reserve’s decision to trim monthly bond purchases by a further $10 billion overnight on Wednesday the US dollar has slowly strengthened against most currencies since. Whilst advance GDP figures for the final quarter of last year fell short of expectation as did weekly unemployment claims and pending home sales, the release of such disappointing economic indicators was not enough to dampen investors demand for the Greenback. Whilst higher against the Yen this morning at a rate of 102.67 lower inflationary figures from Germany also assisted the world’s reserve currency when valued against the Euro. Lower against the dollar at a rate of 1.3551 the resounding positive for broader financial markets overnight has been the heightened degree of stability across emerging markets where a handful of central banks have lined up to defend their fragile currencies.

Data releases

• AUD: No data today
• NZD: Trade Balance, RBNZ Gov Wheeler Speaks
• JPY: Household Spending y/y, Tokyo Core CPI y/y
• GBP: No data today
• EUR: CPI Flash Estimate, German Retail Sales m/m, French Consumer Spending m/m, Unemployment Rate
• USD: Core PCE Price Index m/m, Employment Cost Index m/m, Personal Spending m/m, Chicago PMI, Revised UoM Consumer Sentiment.