Chinese data disappoints as AUD falls

Australian Dollar:

The Aussie dollar began Thursday clinging to the 90 US cent mark. The big fall in the AUD came after the FOMC meeting minutes from the US. The announcement brought discussions of a potential interest rate rise in the near future to the table sooner than expected. As the morning of the Asian session began the Aussie traded sideways for the most part, moving in a relatively tight range just above the 90 US cent level. Investors however were cautiously waiting on the Flash Manufacturing data out of China. When the data was released the Aussie went into a dive by over half a per cent to hit lows of 0.8938. Any figure below 50 suggests a contraction whereas above is an expansion. The data was 48.3 versus a forecast of 49.4 and a previous month of 49.5. As the session continued the AUD consolidated finishing at 0.8957. Overnight the Aussie gained on poor US data opening today over half a per cent weaker against the greenback at 0.8995. With no data out locally investors will turn offshore to Europe and the US to end the week.

• We expect a range today of 0.8935 – 0.9055

New Zealand Dollar:

The NZ dollar started Thursday lower than Wednesdays open at 0.8275 and as the Asian session began the Kiwi continued to slide. Investors began the morning awaiting NZ producer price output and input. Producer prices for inputs were down 0.7 per cent for the quarter after a last quarter rise of 2.2 per cent and a forecasted rise of 0.9 per cent. Producer price for output was also down 0.4 per cent and once again this was after a previous quarter of gains. Prices manager Chris Pike announced that the drop in price of electricity was due to a lower demand during the summer months. However on a yearly level the PPI did manage to climb 3.8 per cent for output and 2.8 per cent for input. These figures did little to the Kiwi as investors waited cautiously on the Chinese manufacturing data out later in the afternoon. The numbers disappointed and came in at 48.3 which was 1.1 below expectations. The NZ dollar dived soon after the data to lows of 0.8244. The Kiwi managed to creep back up during the rest of the Asian session finishing at 0.8269. During overnight trade the NZ dollar gained back all of its losses against the Greenback after worse than expected data was released in the US opening today slightly higher at 0.8292. With no data out locally investors will turn offshore to Europe and the US to end the week.

• We expect a range today of 0.8240 – 0.8345

Great British Pound:

The British Pound had one of the more eventful trading sessions out of the major currencies on Thursday. During the Asian session the GBP lost ground against the US dollar, however gained against the higher yielding AUD and NZD. The Sterling spent most of the morning trading cautiously in a range as investors awaited the data release on flash manufacturing out of China. As the numbers were released indicating a contraction the British Pound jumped on the AUD and NZD by 110 points and 64 points touching highs of 1.8654 and 2.0224 respectively. The Sterling traded in a tighter range against the US staying within a 22 point span during the Asian session as investors waited for the Euro and US data. Overnight the British Pound failed to take advantage of subpar data from the US partially due to the UK’s own troubling figures earlier on in the European session. The UK’s CBI industrial order expectation increased 5 points less than expected and although the CBI head of Economic Analysis said “The manufacturing sector shows signs of improvements” Cable fell just under a quarter of a per cent. Today the Sterling opens weaker than yesterday at 1.6658 against the US. Similarly the GBP fell overnight against the AUD and NZD opening today at 1.8489 and 2.0066 this morning. All eyes tonight turn to Retail sales figures in the UK.

• We expect a range today of 1.8425 – 1.8575

Majors:

The Euro opened Thursday slightly down from Wednesday against the US trading at 1.3734. During the Asian session the Euro crept up against the Greenback marginally and traded within a tight 20 point range.

On a night filled with data the Euro figures disappointed. The French, German and Euro Flash Manufacturing figures were all less than forecast as well as the German PPI and French CPI. Another night of poor data has brought back the debate where the European Central Bank is contemplating a stimulus program to try and increase inflation. At the present the inflation rate is below 2 per cent which is the current target and the ECB may be forced to take action imposing less than zero interest on bank deposits.

The Euro’s losses were softened by poor data out of the US. The US Unemployment claims fell by 3,000 however were expected to decline 4,000 while Core CPI figures were on forecast. These figures will be taken into account as the Fed is currently in the process of reviewing the rate to which it will decrease the 65 billion US dollar bond purchases.

Overall the Euro opens slightly lower at 1.2706 against the Euro as investors will turn to US Existing home sales overnight.

Data releases: 

• AUD: No Data
• NZD: No Data
• JPY: Monetary Policy Meeting Minutes
• GBP: Retail Sales m/m, Public Sector Net Borrowing
• EUR: EU Economic Forecasts
• USD: Existing Home Sales, FOMC Member Fisher Speaks