Global risk aversion prompts USD move

Australian Dollar:

As was widely expected the Reserve Bank of Australia kept its key benchmark rate unchanged at a record low of 2.5 percent yesterday, re-iterating that existing policy settings are appropriate emphasising that a period of stability is also expected. With Keeping rates on hold for a 12th   consecutive month the Australian dollar overall has been little changed over the past 24 hours trading between a range a 0.9292 – 0.9341 when valued against its US Counterpart. Opening lower this morning at a rate of 0.9303 the higher yielding unit has once again proved to be a resilient currency after Glenn Stevens repeated his stance that the exchange rate remains high by historical standards, particularly given the broader drop across commodity prices. Looking further down the road this week,   domestic happenings will continue to be the focus ahead of key unemployment numbers which are due for release tomorrow

• We expect a range today of 0.9280 – 0.9330

New Zealand Dollar:

The New Zealand dollar has slumped to an overnight low of 0.8450 when valued against its US Counterpart losing more than half a cent following a significant drop in global diary prices. With a slightly stronger US dollar (triggered by global risk aversion) also doing the Kiwi few favours, last night’s low represents a critical juncture for the New Zealand dollar, a level if broken could open up the potential for additional falls. Notably weaker this morning at a rate of 0.8465 investors will be keeping a very close eye on domestic labour market figures which are due for release early in the piece this morning.

• We expect a range today of 0.8430 – 0.8490

Great British Pound:

The Great British Pound has done well overnight to advance against its US Counterpart after figures showed UK Services strengthened more than economists had forecast during July. Accelerating at its fastest pace in eight months there has been some solid signs of wage growth indicating that if construction and manufacturing sectors remain strong then the British economy remains on track to grow by around 0.8 percent this quarter. Stronger across the board this morning it’s been an impressive 24 hours period for the Sterling higher against the US dollar (1.6881), the Aussie (1.8142) and the Kiwi (1.9935).

• We expect a range today of 1.8100 – 1.8180

Majors:

The US dollar Index a measure of the Greenback when valued against a basket of currencies jumped to its highest level in 10 months overnight buoyed by investors demand for safe haven assets. Given tensions which have once again escalated across Eastern Europe, markets appear slightly jaded upon open this morning with the only positive note coming from the United States after Factory Orders in July and ISM Non-Manufacturing PMI both comfortably beat market consensus. In currency moves overnight the Euro struggled against a stronger US dollar as it opens weaker this morning at a rate of 1.3372. Appearing as if the ground is becoming increasingly unstable for the 18-nation currency it would take a brave investor to be long Euro today ahead of The ECB’s monthly monetary policy meeting tomorrow. Meanwhile against the Yen the greenback is steady at a rate of 102.579.  

Data releases

• AUD: No data today
• NZD: Employment Change q/q, Unemployment Rate
• JPY: Leading Indicators
• GBP: Manufacturing Production m/m
• EUR: German Factory Orders m/m
• USD: Trade Balance