Emerging market rout weighs on Aussie

Australian Dollar:

Whilst the Australian dollar opens the new week comfortably above its 7-day low of 0.8676 when valued against its US Counterpart the higher yielding is still half a cent lower than where it left it on Friday opening this morning at a rate of 0.8749. With the move lower in line with the significant sell-off witnessed across emerging markets the Federal Reserve’s decision to cut stimulus by a further $10 billion per month is already having a notable impact on global capital flows, favouring the safest and deepest  pockets. In what’s shaping up as a week clustered week of economic releases investors aren’t expecting any chance from the Reserve of Bank of Australia when they meet tomorrow to discuss monetary policy settings.

• We expect a range today of 0.8720 – 0.8780

New Zealand Dollar

The New Zealand dollar reached a five-month low of 0.8060 when valued against its US Counterpart late on Friday night as concern over emerging markets weighed on broader risk sentiment. With investors instead choosing to buy other major units including the Japanese Yen and US dollar the Kiwi has struggled in the era since the US Federal began the process of exiting the stimulus game. Whilst investors were also left disappointed last week after RBNZ Governor Graeme Wheeler left interest rates on hold, tighter monetary policy which is just around should in a broader sense support New Zealand’s currency. Lower this morning the Kiwi currently buys 80.70 US Cents.    

• We expect a range today of 0.8030 – 0.8100

Great British Pound:

Data flows were few and far between on Friday as the Great British Pound lost ground when valued against the US dollar. Slipping by around half a cent Central banks from South Africa, Turkey and Argentina have been forced to raise interest rates over the past week in an attempt to curb the rapid depreciation of their underlying currencies. During a session dominated by Yen and US dollar strength the Sterling is weaker by comparison this morning at 1.6432. Meanwhile against the Aussie (1.8777) and the Kiwi (2.0322) some solid gains were recorded.  

• We expect a range today of 1.8730 – 1.8810

Majors:

US Stocks tumbled on Friday given the unease which continues to surround emerging markets. Notching up its third weekly decline in as many weeks a handful of disappointing corporate earnings results have also done equities few favours. In what quickly became a risk off session on Friday the global rout has spurred investors to reverse carry trades helping the Japanese Yen appreciate when valued against its US Counterpart. Moving from an overnight high of the 102.94 the USD/JPY is lower this morning at 102.019. Meanwhile across in Europe the shared currency has also struggled at the hands of stronger dollar 0.6 percent lower this morning at 1.3486. In a week ahead dictated by Central bank meetings no major policy changes are expected from the BOE, RBA and ECB.  

Data releases

• AUD: Building Approvals m/m
• NZD: No data today
• JPY: No data today
• GBP: Manufacturing PMI
• EUR: Italian Manufacturing PMI, Spanish Manufacturing PMI
• USD: ISM Manufacturing PMI