Easter celebrations keep volumes low and ranges tight

Australian Dollar:

The Australian Dollar opens relatively unchanged this morning as markets remain quiet with most major trading centres closed for the Easter long weekend. Holding onto recent gains above 0.93 the AUD moved within an extremely tight range through Friday trading. Looking ahead the domestic calendar is spearheaded by inflation date due Tuesday. A strong reading will help support the RBA’s neutral monetary policy stance with further direction coming from offshore stimuli in the form of US home sales and unemployment claims.

We expect a range today between 0.9300 – 0.9350

New Zealand Dollar:

The Kiwi recorded significant weekly declines last week as investors prepare for this Thursday Reserve Bank rate announcement. Marking its biggest 5 day drop since January the NZD fell below 0.86 to close the week a full cent lower at 0.8578. Investors will be keenly focused on the RBNZ as a second consecutive interest rate hike is expected in a bid to combat Auckland’s burgeoning housing market with a 2% increase expected over the coming 12 months. Should the Central Bank meet market expectations and increase cash rates the attractiveness of the NZD as a higher yielding asset will only be enhanced and we would expect the NZD to maintain recent ranges between 0.8550 and 0.87.

We expect a range today between 0.8550 – 0.8600

Great British Pound:

The Pound moved upward pushing to a four and a half year high on Thursday as Wednesdays stronger than expected employment data reignited expectations the Bank of England may look to raise rates earlier than its Central Bank counterparts. The unemployment rate fell below 7% to 6.9% while jobless claims dropped by 30,400. The Bank of England (BoE) has long pointed to employment health as a marker for Forward Guidance and Monetary Policy changes and last week’s stronger showing offers scope for an accelerated BoE timeline. With UK markets closed today for Easter Monday investors will be keenly awaiting Wednesday’s MPC vote announcement as a key indicator of Central Banks current stance.

We expect a range today between 1.7970 – 1.8025

Majors:

The US Dollar showed signs of recovery against its European and Japanese counterparts last week as stronger data offered continued to support to Fed’s tapering program. A stronger than expected Philadelphia factory index and improved jobless claims were the catalysts needed to encourage investors to unwind safe haven holdings and support the Greenback. The Japanese Yen reversed recent gains and moved lower touching 10 day lows late Friday as the dollar moved back through 1.02 to highs above 1.0250. The Euro traded lower moving back toward 1.38 on the back of comments from ECB board member Yves Mersch. Mersch joined ECB President Mario Draghi in calling for a lower Euro value claiming the high/inflated currency is hurting the Eurozone’s brittle resurgence and that sustained strength will likely lead to Central Bank action. With many market centres closed Monday for the extended Easter long weekend we expect little action today. Attentions this week will turn to key German and French Manufacturing numbers and US existing home sales and unemployment claims as the headline data sets driving direction.