AUD under pressure as Iron Ore prices slide

Australian Dollar:

Sinking to six month lows the Australian Dollar has come under increasing pressure this week seemingly breaking through resistance at 0.9180 having touched intraday lows of 0.9112 through trading Wednesday. Broad based US Dollar strength has forced a selloff in emerging market and commodity based currency with the Aussie flailing as Iron Ore prices continue to slide. Softer than expected Westpac Consumer Sentiment added fuel to the downward spiral and we open this morning clinging to 0.9150. Attentions now turn to labour market data with employment change and the unemployment rate scheduled for release at 11:30 today while Chinese CPI numbers will offer directional impetus from offshore. A weaker than anticipated reading could see the AUD driven lower still, breaching support at 0.9150.

• We expect a range today between 0.9080 – 0.9280

New Zealand Dollar:

The New Zealand Dollar moved lower this morning as the RBNZ opted to keep rates on hold allowing the economy time to adjust to earlier rate hikes. The Central Bank cited moderate inflation, subdued wage increases, stable inflation expectations, weak global inflation and a stubbornly high New Zealand dollar as its primary reasons for maintaining the status quo. The immediate result was a dip below 0.82 as Reserve Bank Governor Wheeler continues to jawbone the currency lower in the accompanying press conference taking place at time of writing.

• We expect a range today of 0.8080 – 0.8250

Great British Pound:

Focus remains squarely with the Scottish referendum as Sterling’s primary directional driver this week. Having dipped to its lowest level in 10 months, touching 1.6052, the Pound recovered jumping back above 1.62 as fresh polls suggested the ‘No’ vote had garnered a slender lead. Prime Minster David Cameron and key political figures are pleading with the Scottish public to vote ‘No’ and keep the union intact. Market direction will largely take guidance from opinion polls as they emerge over the coming week with a Yes vote prompting a raft of uncertainties not just within the UK but across broader European markets.   

• We expect a range today between 1.7600 – 1.7800 

Majors:

General Greenback strength continued Wednesday as the dollar moved through 6 year highs against the Yen while the Euro struggles on weaker economic data sets. Expectations of an early Fed Rate hike continue to gather momentum as analyst suggest there is a 60% chance the Central Bank will move on rates as early as July next year. Compare this against a 52% chance registered at the end of August and the speed of support behind the world’s base currency can be properly appreciated. The Swiss Franc, a typical safe haven currency, plummeted over night as the Swiss National Bank, suggested negative deposit rates may be implemented should the currency remain above its target values. Focus now turns to Unemployment Claims as the main ticket on the North American docket as we expect the USD rally to continue into the weekly close.  

Data releases

• AUD: MI Inflation Expectations, Employment Change and Unemployment Rate
• NZD: Official Cash Rate, RBNZ Monetary Policy Statement and RBNZ Rate Statement/Press Conference
• JPY: BSI Manufacturing Index
• GBP: 30 Year Bond Auction.
• EUR: German Final CPI, French CPI, ECB Monthly Bulletin, Spanish HPI and ECB President Mario Draghi Speaks.
• USD: Unemployment Claims, 30 Year Bond Auction and Federal Budget Balance