AUD holds its ground above 90 US cents

Australian Dollar:

The Aussie dollar began the week slightly down from a day of light trade on Monday due to President’s day in the US. The higher yielding currency began the day at 0.9028 and stayed within a tight range for most of the morning as investors awaited Monetary Policy Meeting Minutes from the RBA. The main take away from governor Glen Stevens was that the lower dollar is working but questions surrounding inflation remain. Shortly after the announcement the Aussie spiked by 30 points and managed to reach highs of 0.9078 during Asian trade. As the session continued the Aussie managed to consolidate amongst strong Foreign Direct Investment figures out of China at 16.1 per cent. Overnight we saw the Aussie hold its ground as the 0.9000 level was tested however the AUD managed to recover as the US session progressed. After weaker than expected US data overnight the AUD was able to bounce back opening slightly higher than yesterday to open at 0.9037 this morning.

• We expect a range today of 0.8985 – 0.9085

New Zealand Dollar:

The New Zealand dollar was amongst the worst performing currencies on Tuesday as the Kiwi slipped nearly three quarters of a per cent against the greenback. The NZD opened Tuesday slightly weaker against the US at 0.8362 and spent most of the morning trading sideways until the RBA released their Monetary Policy minutes. The NZ dollar jumped 13 points against the US and made a high of 0.8379. As the Asian session continued the NZD drifted lower making new daily lows of 0.8333. This was the lowest for the currency pair in nearly a week. The Kiwi was similarly down against the AUD falling nearly half a per cent. Overnight the NZ dollar continued to slide in the wake of weak data from the US. The NZ dollar broke the 83 cent barrier touching lows of 0.8299 however opens marginally higher at 0.8306 this morning. With no data being released locally today investors will once again look offshore for direction.

• We expect a range today of 0.8260 – 0.8365

Great British Pound:

The British Pound was one of the bigger movers out of the major currencies to begin the week. The GBP opened stronger against the higher yielding currencies after a Monday of limited trade and weak data offshore helped with the gains. The Sterling had a quiet Asian session for the most part however as Glen Stevens from the RBA spoke regarding the Monetary policy meeting the AUD and NZD jumped by 49 and 18 points respectively making lows of 1.8416 and 1.9952. Overnight however the British Pound lost ground against most currencies on the back of poor domestic data which has firmed investor beliefs that the Bank of England is unlikely to raise interest rates in the short term.  The main data release out of the UK was consumer price inflation which was 0.1 per cent lower than forecast at 1.9 per cent. Figures also showed a climb in the housing price index which similarly fell short of forecast by 0.3 per cent at 5.5 per cent. The GBP opens today weaker against the US at 1.6680 slightly above its daily lows. Correspondingly the Sterling is weaker against the AUD opening at 1.8463 however managed to gain ground against a heavy losing NZ dollar opening at 2.0082. Investors will watch the pivotal data out of the UK tonight closely watching the unemployment rate.

• We expect a range today of 1.8385 – 1.8505

Majors:

The Euro traded in an extremely tight range against the Greenback on Tuesday after opening close to half a per cent higher at 1.3704. Investors waited cautiously for overnight data from the Euro and the US to see if market direction could be gauged. During the European trading session onlookers saw mixed data with the current situation index sitting at the highest level in nearly 3 years whilst the expectations index was weaker than forecast. Overall this was viewed as positive and was helped by softer than expected US data. The empire manufacturing and NAHB housing market figures out of the US was lower than forecast however both figures may be weaker due to tough weather over the past few months. The Euro managed to gain reaching highs of 1.3767 against the greenback and opens today 50 points higher than Tuesday at 1.3757. All eyes now will be cautiously waiting on the US Federal Reserve’s release of minutes being released later tonight.

Data releases:

• AUD: CB Leading Index m/m, Wage Price Index q/q
• NZD: No data
• JPY: All Industries Activity, BOJ Monthly Report
• GBP: Claimant Count Change, MPC Asset Purchase Facility Votes, MPC official Bank Rate Votes, Unemployment Rate, Average Earnings Index
• EUR: German 10-y Bond Auction

USD: Building Permits, PPI m/m, Core PPI m/m, Housing Starts, FOMC meeting minutes