Strong US data as Aussie opens lower

Australian Dollar:

The Australian dollar settled into the last day before the long weekend by shifting in a relatively tight range in Asian trade. The Aussie spent Friday at its highest point for the week touching highs of 0.9339 before settling into a horizontal 15 point trade for the remainder of the day. Coming off a Thursday with a heavy docket of data the AIG construction index was the only local economic information released Friday and had a muted effect on the higher yielding currency even though the numbers were positive. The theme this week has been the strong Australian figures grouped with the ECB making a move to reduce their benchmark interest rate and has led to broad AUD strength. Overnight investors watched as strong US figures were announced and the Aussie dropped off losing all of the day’s gains to open this morning at 0.9337. Today is expected to be quiet in Australia as it is a public holiday everywhere but Western Australia however NAB business confidence domestically and Chinese CPI on Tuesday should give direction for the week to come.

• We expect a range today of 0.9290 – 0.9380

New Zealand Dollar:

The New Zealand dollar ended the week in a similar fashion to the Aussie spending Friday’s Asian trade consolidating after a fairly volatile prior session. In a previous night where the market saw the European Central Bank reduce their rates to 0.15 percent the NZ dollar rallied due to the Kiwi’s higher yielding status setting the tone for the market heading into the weekend. As investors looked towards the end of the week the US reported strong job numbers sending the Greenback higher. The Kiwi lost nearly half a cent on the back of these figures and opens Monday having given up all of Friday’s gains at the same level against the US at 0.8500. Today with no data out locally in the US, France or Germany, and a public holiday across the Tasman all eyes will have to look forwards to the RBNZ cash rate decision on Thursday. 

• We expect a range today of 0.8455 – 0.8545

Great British Pound:

The British Pound had an extremely quiet Friday against the higher yielding currencies and followed a similar pattern against the Greenback. The markets in general followed the trend of a calm Friday during Asian trade however investors awaited overnight US and UK data for direction. In UK news the trade deficit was seen to expand to 9.82 billion in the month of April and consumer inflation expectations were lower to 2.6 per cent, however this data had little impact on the markets with investors eyeing US figures to make their moves. The British Pound was kept range bound to end the week against the higher yielding currencies opening marginally lower against the AUD and NZD respectively at 1.7996 and 1.9770. The positive US data released, showed a strong job addition to the economy strengthening the Greenback across the board. The GBP gave up over half a cent opening today weaker at 1.6807. With no data today locally and many offshore bank holidays investors will turn their eyes to Manufacturing Production on Tuesday in the UK for guidance on the British Pound.

• We expect a range today of 1.7945 – 1.8050

Majors:

Friday was a quiet day in the markets during Asian trade whilst investors waited cautiously on US job figures to give direction. The numbers did not disappoint and were solid across the board. The US Department of Labour showed 217,000 jobs had been added to the market and an unemployment rate which remained steady at 6.3 per cent beating forecast for a rise to 6.4 per cent. This data was received by investors as a positive sign and although not surprisingly strong was enough to give onlookers the expectations that the US Federal Reserve will follow on in their tapering of the monthly bond buying program.

The Euro remained under pressure after the ECB cut the cash rate to 0.15 per cent, a record low by 0.1 per cent. The deposit rate was also slashed to -0.1 per cent and the statements from the ECB were strong implying heavy monetary assistance will be given to the banking sector to help with lending.

Today the market will have limited volatility due to public holidays in France, Germany and Australia and with no data in the US or UK investors will turn their eyes to the back end of the week for direction.

Data releases:

• AUD: Bank Holiday
• NZD: No Data
• JPY: Current Account, Final GDP q/q, Bank Lending y/y, Final GDP Price Index y/y, Consumer Confidence, Economy watchers sentiment
• GBP: No Data
• EUR: French and German Bank Holiday, Sentix Investor Confidence
• USD: No Data