Aussie dollar shrugs off strong US numbers

Australian Dollar:

The Australia dollar began the week sitting comfortably below the US94 cent handle at 0.9387. As the morning progressed the AUD traded in a tight 30 point range against the USD with very little volatility due to lack of domestic data being released. The Aussie’s biggest move against the Greenback came in the early hours of Asia trade jumping 22 points to touch highs once again above the US94 cent mark to 0.9407. However as the session continued the AUD drifted slightly lower and consolidated to continue trading with little movement for the remainder of the day. Overnight we saw positive retail sales figures out of the United States as US dollar strength lead the Aussie to fall marginally against the Greenback. Nonetheless as trade progressed the US dollar lost momentum and the Aussie gained back ground to open higher than Monday at 0.9419. Today all eyes will be on the Reserve Bank of Australia’s monetary policy meeting minutes which will certainly give the AUD direction for the remainder of this shorter week.

• We expect a range today of 0.9370 – 0.9455

New Zealand Dollar:

In a day where no data was released locally in New Zealand the NZ dollar began the week trading sideways within a narrow 20 point range for the most part of the Asian session against the Greenback. The higher yielding currency touched highs of 0.8692 early on in the day and made lows soon after of 0.8672 as investors waited on offshore data from the US for direction. As Asian trade came to a close the NZ dollar began losing ground on the back of USD strength and made daily lows of 0.8632. Overnight the Kiwi recovered all of the lost ground and held strong to put aside the robust US retail sales figures to open today 10 points higher than yesterday at 0.8693 versus the US. Today eyes will be focused across the Tasman for the monetary policy meeting minutes in Australia whilst overnight investors will watch US figures and a speech from US Federal Reserve chair Janet Yellen for further guidance.

• We expect a range today of 0.8650 – 0.8740

Great British Pound

The British Pound began the week by climbing steadily against the USD after opening close to the 1.67 handle. In the early parts of the Asian session the GBP reached highs of 1.6741 however soon after drifted sideways into a tight 20 point range for the remainder of Asian trade. There was no data being released on Monday in Australia and New Zealand and the GBP followed cautious trade with both of the higher yielding currencies. The Sterling’s biggest move against these high yielding currencies came in the early morning where the Aussie and Kiwi put on 40 and 27 points respectively. The night session was relatively uneventful for the GBP with minimal data to provide volatility. The Sterling opens today at similar levels against the US today after making highs of 1.6741 and lows of 1.6698 overnight. The higher yielding currencies had mixed night sessions as the Aussie managed to gain ground while the Kiwi struggled. The AUD and NZD open today at 1.7765 and 1.9270 respectively against the British Pound. All eyes tonight will be on the CPI figures out of the UK in a session which heavy data releases could lead the way for high volatility for the Sterling.

• We expect a range today of 1.7695 – 1.7790

Majors:

The Euro began the week in a strong position trading at 1.3853 against the US dollar however with no data being released during the Asian session the currency pair traded sideways within a narrow 17 point range.

Overnight the US retail figures were released which helped the Greenback gain against most major currencies. The strong figures have beat out expectations and may be a sign that the economy is recovering after a tough winter provided a setback to the world’s biggest economy.

Retail sales came in at 1.1 per cent verse the 0.8 per cent forecast and a previous figure of 0.7 per cent. Core retail sales which does not include automobiles increased to 0.7 per cent, 0.2 per cent higher than forecast. These strong figures will help with the speculation that further tapering to the US 55 billion dollar a month Fed asset purchases is close by.

All eyes will now turn to the US Federal Reserve chair Janet Yellen as she prepares to speak overnight.

Data releases:

• AUD: Monetary Policy Meeting Minutes
• NZD: No Data
• JPY: No Data
• GBP: BRC Retail Sales Monitor, CPI y/y, PPI Input m/m, RPI y/y, Core CPI y/y, HPI y/y, PPI Output m/m
• EUR: Trade Balance, German ZEW Economic Statement, ZEW Economic statement
• USD: Core CPI, CPI m/m, Empire State Manufacturing Index, Fed Chair Yellen Speaks, TIC Long-Term Purchases, NAHB Housing Market Index, FOMC Member Plosser Speaks