All eye's on this evening's Budget

Australian Dollar:

The Australian dollar opens flat this morning with investors instead standing-by in anticipation of this evening’s federal budget. In what has been a very uneventful start to the week the Australian dollar has traded in a very tight range when valued against its US Counterpart with a low of 0.9347 contrasted by a high of 0.9384. With investors remaining relatively cautious, if the budget includes the much hyped tax hikes, spending cuts and public sector job losses then it would certainly create an interesting policy mix with the tight Fiscal outlook putting additional pressure on the RBA to spur growth. Opening steady this morning the Australian dollar buys 93.62 US Cents. 

• We expect a range today of 0.9330 – 0.9390

New Zealand Dollar:

Investors remain clearly focused on what lies ahead this morning given the market has offered investors very little to trade off over the past 24 hours. Drifting between an extremely tight 30 basis point range overnight direction today is set come from China where a string of monthly reports including figures surrounding fixed asset investment, industrial production and retail sales for the month of April are expected to show the world’s second largest economy continues to grow at a steady pace. Given China remains New Zealand’s largest trading partner the importance of today’s figures are amplified by the markets quiet lead up. Opening in familiar territory this morning the Kiwi currently buys 86.16 US Cents.

• We expect a range today of 0.8580 -0.8650

Great British Pound:

Helping the Great British Pound appreciate overnight UK Stocks climbed to their highest level in 11 weeks. Bolstered by some impressive gains across commodity producers the Sterling has also benefitted during the early parts of this week from currency and bond market traders who all continue to speculate the Bank of England will raise rates soon off the back of an improved macro picture. Speculation which is only set to further strengthen the Sterling the Pound is stronger against the Greenback this morning at a rate of 1.6867. In other moves the Pound has advanced also against both the Aussie (1.8014) and the Kiwi (1.9568).

• We expect a range today of 1.7980 – 1.8050     

Majors:

A sense of calm has installed itself across currency markets overnight with the 17-nation Euro wrapping up two days of consecutive losses when valued against its US Counterpart. Hinting the large sell off in excess of 2 US cents may have finally come to an end before the ECB’s next meeting in June where some additional stimulus has been promised the next major risk event for the Euro comes this Thursday in the form of European CPI. Whilst steady this morning at a rate of 1.3757 the major mover over the past 24 hours has been the US dollar which has managed to prop itself back up above the 102 mark when valued against the Japanese Yen. Stronger this morning at 102.126 core retail figures this evening remains the highlight of the data releases from the United States

Data releases

• AUD: Home Loans m/m, HPI q/q, Annual Budget Release
• NZD: FPI m/m
• JPY: 30-y Bond Auction
• GBP: MPC Member Cunliffe Speaks
• EUR: German Zew Economic Sentiment
• USD: Core Retail Sales m/m, Retail Sales m/m,