Weak numbers drive global growth concerns

Australian Dollar:

The Australian dollar fell during the domestic session yesterday doing well to cling to the 0.8750 mark when valued against its US Counterpart after December building approval numbers fell short of expectation. Further dampening demand for Australia’s currency and in line with the softer manufacturing figures released late last week yesterday’s data print also pointed towards a deterioration in the services sector with the non-manufacturing PMI reading falling to 53.4 in January from 54.6 in December. Opening weaker this morning at a rate of 0.8748 all eyes will be on the Reserve Bank of Australia this afternoon where despite the fact no-change to the underlying cash rate is expected policy makers may well continue their verbal assault on the currency as they cling to the hope a lower dollar should assist in rebalancing the domestic economy. For the time being resistance can be found at 0.8800 followed by support at 0.8700.

• We expect a range today of 0.8700 – 0.8800

New Zealand Dollar

The New Zealand dollar has remained in a sluggish mood during the early parts of this week circulating close to its lowest point in more than five weeks when valued against its US Counterpart. Having dropped to an overnight low of 0.8083 disappointing services data from China along with disappointing manufacturing data from the US has kept investors appetite for risk low. Lower against the Greenback this morning at a rate of 0.8090 new volatility is expected this afternoon ahead of the RBA’s interest rate decision which threatens to the throw the NZD.AUD cross either side of its opening level this morning of 0.9246.  

• We expect a range today of 0.8050 – 0.8130

Great British Pound:

The Great British Pound has declined for a fifth day versus the dollar after a report showed manufacturing expanded in January at a slower than expected pace. Tumbling against all but two of its 16 major peers the Sterling’s reliance on a strong economic backdrop has been clearly evident over the past 24 hours. Increasing bets that policy makers will commit to lower rates for longer the Great British Pound fell from an earlier high of 1.6439 to open this morning at a rate of 1.6304. In other moves the Sterling is also lower against both the Australian dollar (1.8631) and the New Zealand dollar (2.0147)

• We expect a range today of 1.8600 – 1.8670

Majors:

Sparking fresh concerns over the health of the world’s largest economy a gauge of manufacturing activity fell by a greater than expected amount overnight. Whilst the extreme cold front which braced the United States no doubt played a role in the ISM Manufacturing Index falling from 56.5 in December to 51.3 in January it appears investors are still adjusting to a world where the Fed continues to withdraw stimulus. Whilst the US dollar is lower this morning against the EUR and JPY some of its recent gains against emerging market currencies have also been scaled back. In a generally positive session for the 17 nation bloc Spanish manufacturing PMI and Final PMI numbers both beat the majority of forecasts. Ahead of key Central Bank and employment reports later in the week the Euro is stronger this morning as it currently trades at 1.3526.  

Data releases

• AUD: RBA Rate Statement
• NZD: No data today
• JPY: No data today
• GBP: Construction PMI, Halifax HPI m/m
• EUR: No data today
• USD: Factory Orders m/m