Three week rally stalls as risk sentiment takes hold

Australian Dollar:

Following a three week 4 percent rally for the Australian dollar when valued against its US Counterpart the higher yeilding asset once again ran out of steam up above the critical 90 US cents juncture on Friday. Following on from a private report ealier in the week which showed China's manufacturing sector had weakened more than forecast, investors did their best on Friday to shrug off figures which showed a drop in the sale of existing homes across the United States. Having reached an late session low of 0.8950 broader risk sentiment appears fragile this morning as the Australian dollar opens lower buying 89.70 US Cents. With very little on offer domesitcally this week investors will be keen to see improved data flows from the worlds largest economy as adverse weather conditions continue to destort economic progess.

• We expect a range today of 0.8940 - 0.90000 

New Zealand Dollar

Well off its highs from last week the New Zealand dollar opens this morning 0.2 percent lower at a rate of 0.8270 when valued against its US Counterpart. In what proved to be a relatively flat end to the week traders were largely reluctant to pick up the Kiwi in the face of mixed data results from the worlds largest economy. Given its association with risk, a cautious tone has weighed heavily on currencies similiar to the Kiwi helping explain Fridays low of 0.8264. With resistance now looming close by at 0.8300 the Kiwis first test this week will come in the form of inflationary expectations, numbers which are scheduled for release early tomorrow morning.

• We expect a range today of 0.8240 - 0.8300

Great British Pound:

Proving the move to higher ground is far from an gauranteed one the Great British Pound notched up its biggest weekly decline in three months when valued against its US Counterpart. As reports last week showed the unemployment rate increased whislt inflation and retails declined the string of below par indicators has dampened speculation that the Bank of England is moving closer to raising interest rates. Making the first week of disapointing data flows the Sterilng reached a lower of 1.6610 on Friday opening this morning not far from that level at a rate of 1.6613. Whilst notably lower when valued against the Greenback its hasnt been all one way traffic for the Sterling stronger this morning against both the Aussie (1.8506) and the Kiwi (2.0057)

• We expect a range today of 1.8470 - 1.8530

Majors:

The US dollar has been relatively tame over the past week with Fridays disapointing existing home sales number continuing the recent trend of below forecast economic indicators. Whilst figures on Friday showed the sale of used homes fell by 5.1 percent in January to an annual pace of 4.62 million units, the number, whilst kept in context has surpressed investors interest in buying US dollar demominated assets. During a far from inspiring session in which the USD/JPY traded in the familiar range of (102.255 - 102.818) the next break higher for the Greenback appears highly linked to the Federal Reserves ability to wind back stimulus at an accelerated pace. In other moves last week the EUR/USD managed to consolidate moves up above the 1.3700 level as it opens stronger this morning at a rate of 1.3735.   

Data releases

• AUD: No data today
• NZD: No data today
• JPY: No data today
• GBP: Nationwide HPI m/m
• EUR: German Ifo Business Climate, Core CPI y/y, CPI y/y
• USD: No data today