AUD higher on soft US numbers

Australian Dollar:

The Australian dollar began Thursday sitting in familiar territory as it was knocking at the door of the US94 cent handle. The Aussie managed to move past the US94 cent mark hitting highs of 0.9408 however this was short lived. In early trade the Reserve Bank of New Zealand lifted the cash rate to 3.25 per cent and the AUD dropped off against the Kiwi by over a cent as New Zealand’s benchmark rate increased the difference in its already higher yield over the Aussie. The AUD remained fairly range bound against the US dollar for the remainder of Asian trade as Employment figures just before midday failed to jolt the Aussie. The employment data came through mixed and onlookers witnessed 4800 workers disappearing from the market whilst the unemployment rate surprisingly held steady at 5.8 per cent, 0.1 per cent higher than forecast. Despite these figures the Australian labour market does look steady and has grown by just under 100,000 jobs since the start of the year which is a good sign for the economy. Overnight investors watched as a number of poor US figures were released, retail and unemployment and the AUD rallied back up passed the US94 cent mark to touch fresh highs of 0.9439. Today we see the Australian dollar open nearly half a cent stronger at 0.9424. As we head into the weekend there is no local data on Friday as the Aussie dollar and investors will turn to offshore sentiment, mainly the industrial production out of China.

• We expect a range today of 0.9380 – 0.9465

New Zealand Dollar:

The New Zealand dollar had another positive day on Thursday managing to strengthen further against the US dollar. After the Reserve Bank of New Zealand lifted rates for the 3rd time this year to 3.25 per cent which was on forecast the Kiwi began its climb against the Greenback gaining nearly 70 points. The strong growth out of New Zealand has been a positive sign where many economies are struggling however the resilient NZ dollar is becoming a concern for the exporting nation which may need to be addressed down the track. As Asian trade continued the Kiwi showed no real sign of slowing down touching highs of 0.8655 nearly a cent higher than the open. Overnight the NZ dollar continued to climb as broad US dollar weakness was witness on the back of poor economic data with retail and unemployment numbers softer than forecast. The NZD touched highs of 0.8698 and opens substantially higher to begin Friday at 0.8686. Today all eyes will on the Chinese industrial production and the local Business NZ manufacturing Index.

• We expect a range today of 0.8640 – 0.8735

Great British Pound:        

As Asian trade began the British Pound had an interesting session with a decent amount of economic data out of the higher yielding currencies to provide volatility. The GBP took advantage of mixed job numbers out of Australia managing to climb a quarter of a percent against the AUD to highs of 1.7930. Conversely on the back of the RBNZ lifting rates in New Zealand the Kiwi gained across the board and this was no different against the British Pound. The GBP lost half a per cent instantly and continued to drift lower touching 1.9406, almost a cent lower than the open. With nothing to spur the Sterling to move against the Greenback the GBP lifted only 10 points off the open on subdued trade hovering around the US1.6800 handle. This morning the bank of England has hinted that a rate rise is possible in the UK as Governor Carney has stated that it may occur “sooner than markets currently expect”. On the back of this announcement markets watched as the GBP rallied across the board. The Sterling lifted over a cent against the USD, AUD and NZD opening this morning significantly stronger at 1.6932, 1.7969 and 1.9491 respectively.

• We expect a range today of 1.7925 – 1.8015

Majors:

In a relatively quiet session Asian session the Euro traded in a tight 15 points range touching highs of 1.3545 and lows of 1.3530. Investors were cautiously waiting on retail sales from the US for direction.

Overnight highly anticipated numbers from the US failed to impress coming in well short of forecast. First off the block investors watched as the retail sales numbers were shown to rise only 0.3 per cent whilst an uptake of 0.5 per cent was expected. In a later report the number of people applying for unemployment benefits increased to 317,000 which was a rise of 4,000. The number was expected to decrease by 3,000. The economic releases saw the US dollar fall as the Euro touched highs of 1.3574 against the US dollar opening today at 1.3562, 30 points higher than Thursday. 

Onlookers will now turn their focus on Consumer sentiment and PPI from the US for direction heading into the weekend with not much being released from Europe on Friday. 

Data releases:

• AUD: No Data
• NZD: Business NZ Manufacturing Index, FPI m/m
• JPY: Monetary Policy Statement, Revised Industrial Production m/m, BOJ Press Conference
• GBP: CB Leading Index
• EUR: French Final Non-Farm Payrolls q/q, German Final CPI m/m, Employment Change q/q, Trade Balance
• USD: PPI m/m, Core PPI m/m, Prelim UoM Consumer Sentiment, Prelim UoM Inflation Expectations