Australian dollar keeps its head above 90 US Cents

Australian Dollar:

The Australian Dollar held onto recent gains and continued to trade above 0.90 throughout Wednesday’s local session. Bolstered by returning risk appetite and abating emerging market concerns the AUD moved within a tight 30 point range during the morning session before a better  than expected Chinese Trade Balance number fuelled another upward push and the Aussie moved through 0.9050. With the key resistance point of 0.9080 still in play the currency traded sideways in the lead up to the European and North American sessions. Opening this morning virtually unchanged compared to the same time yesterday at a rate of 0.9030 heightened price activity is expected later this morning ahead of the release of local employment figures where its expected employers added 15 000 new jobs in January.  

• We expect a range today of 0.8980 – 0.9080

New Zealand Dollar

Sending the New Zealand dollar to an afternoon high of 0.8367 when valued against its US Counterpart numbers yesterday showed the volumes of imports and exports in China comfortably surpassed expectation. Defying signs that growth in the world’s second largest economy and New Zealand’s most important trading partner is stalling imports advanced by 10 percent helping produce the widest trade surplus since January 2009. Despite its strong intraday form demand for New Zealand’s currency waned during offshore trade following equity markets lower after a handful of poor earnings results overshadowed optimism surrounding growth. Opening this morning in familiar territory the New Zealand dollar currently buys 83.14 US Cents

• We expect a range today of 0.8280 – 0.8340

Great British Pound:

Whilst underscoring his pledge to keep interest rates at a record low for longer Bank of England Governor Mark Carney overnight also raised his growth projections for Britain’s economy from 2.8 percent to 3.4 percent for 2014.  In response to the Bank of England’s upbeat assessment the Great British Pound moved rapidly from an earlier low of 1.6424 touching an eventual high of 1.6593 when valued against its US Counterpart. In what should be viewed as a longer-term positive for the Sterling traders are now starting to invest in the notion the UK recovery story is now more entrenched and more broadly based. Stronger this morning across the board the Sterling is higher against the Greenback (1.6593), the Aussie (1.8372) and the Kiwi (1.9952)

• We expect a range today of 1.8340 – 1.8410

Majors:

Against the US Dollar the euro lost 0.4 percent overnight after figures showed Industrial Production in the Eurozone fell 0.7 percent in December. Having touched an overnight low of 1.3561 the 17-nation currency was dealt a further blow overnight after ECB Executive Board member Benoit Coeure commented that Policy makers were very serious in considering negative deposit rates. Given a backdrop in which Central Banks globally are finally starting to exit the stimulus game, the crippling debt levels evident across Europe are no doubt still hampering the efforts of Policy who would prefer to see a sustained improvement across the macro environment. Whilst lower this morning at a rate of 1.3591 in other currency moves the USD/JPY maintained recent ranges mildly weaker this morning also at 102.475. Looking ahead this evening investors will be keeping a close eye on Janet Yellen’s testimony before the Senate Banking Committee with US Retail sales also set to be a catalyst for added volatilities.  

Data releases

• AUD: Employment Change, Unemployment Rate, MI Inflation Expectations and RBA assistant Governors Debelle and Kent Speak.
• NZD: Business NZ Manufacturing Index
• JPY: CGPI y/y
• GBP: RICS House Price Balance, 10-yy Bond Auction and 30-y Bond Auction
• EUR: ECB Monthly Bulletin and Italian 10-y Bond Auction
• USD: Core Retail Sales, Retail Sales, unemployment claims, Fed Chair Yellen Testifies on the Semi-annual Monetary Policy Report before the Senate Banking Committee and Business Inventories.