Local figures support AUD rally

Australian Dollar:

Demand for the Australian dollar was given a further boost yesterday after figures revealed Australia’s trade balance had moved into surplus for the first time in two years. With exports having risen by 4 percent in December and imports by 2 percent the net trade balance of $468 million comfortably surpassed expectation. Jumping to a late afternoon high of 0.8979 when valued against its US counterpart figures also showed the festive season had rewarded retailers nicely with sales up 0.5 percent. In what has been a busy week for local traders more action is expected today given the Reserve Bank of Australia is set to release their Monetary Policy Statement providing an insight into the banks view of economic conditions. Opening stronger this morning the Australian dollar currently buys 89.66 US Cents.

• We expect a range today of 0.8920 – 0.9000

New Zealand Dollar

In line with improved labour market conditions and broader risk sentiment the New Zealand dollar has enjoyed a solid upward run when valued against its US Counterpart this week, a run which continued overnight. Whilst domestic economic flows have provided little assistance over the past 24 hours highs of 0.8281 have been witnessed amid signs that the underlying momentum throughout the world’s largest economy remains intact. Opening this morning half a cent stronger at a rate of 0.8257 the offshore piece will continue to be the important one this evening ahead of employment figures from the US which if stronger than expected should provide support for the Greenback ahead of the Kiwi.

• We expect a range today of 0.8220 – 0.8290

Great British Pound:

Whilst sliding to its weakest point in five weeks versus the Euro the Great British Pound opens marginally stronger against the Greenback this morning at 1.6323 after the Bank of England announced that interest rates would be kept at a record low. With gains across equity markets keeping demand for safe-haven assets low the challenge now for Policy makers in Britain revolves around how they can communicate a stronger domestic economy without suggesting rates will be up increasing. Whilst stronger against the Greenback the Great British Pound is lower against both the Australian dollar (1.8203) and the New Zealand dollar (1.9765).

• We expect a range today of 1.8170 – 1.8240

Majors:

Triggering a buying opportunity for the 17-nation euro European Central Bank President Mario Draghi left interest rates on hold overnight stating that policy makers had the ability to tackle lower inflation however they would wait until further economic data became available. Whilst Draghi reiterated the risks for the euro zone remain very much to the downside Policy makers appear comfortable with the notion of maintaining a very high degree of monetary accommodation. Climbing the most in two weeks when valued against its US Counterpart the Euro is stronger this morning at a rate of 1.3587. In other happenings overnight US equity markets pushed higher amid improved earnings and falling weekly jobless claims. With the Greenback opening stronger this morning against the Japanese Yen at 102.066 tonight’s session is all about the non-farm payrolls report where its expected employers added 185 000 new jobs to the world’s largest economy last month.

Data releases

• AUD: RBA Monetary Policy Statement
• NZD: No data today
• JPY: Leading Indicators
• GBP: NIESR GDP Estimate, Manufacturing Production m/m, Trade Balance
• EUR: German Trade balance
• USD: Non-farm employment change, Unemployment rate