Fed Rhetoric keeps Greenback Strength intact

Australian Dollar:

Despite comments from US Federal Reserve Chair Janet Yellen that interest rates would remain at near zero for a “considerable time” the net effect of her comments have seen the US dollar strengthen during overnight trade. Whilst the move to higher rates remains highly conditional and linked to the performance of the broader economy forecasters have remained relatively optimistic in their estimates surrounding tighter monetary controls. Moving from an opening level of 0.9092 when valued against its US Counterpart the Australian dollar tumbled to a low of 0.8949 opening this morning not too far from that level at a rate of 0.8955. With not a great deal on offer locally today investors will continue to digest and focus on additional rhetoric from world’s largest central bank as a stronger Greenback continues to wreak havoc.

• We expect a range today of 0.8920 – 0.9000

New Zealand Dollar:

The New Zealand dollar has plunged to a fresh 7-month low against its US Counterpart in overnight trade after the US Federal Reserve raised hopes of higher interest rates sooner. Whilst maintaining further guidance within the statement rate speculation has increased off the back of broader economic momentum which appears to be gathering steam. Boosting demand for the Greenback the Kiwi slumped to a low of 0.8076 overnight unable to stage any type of meaningful recovery opening lower this morning at a rate of 0.8092. In what’s set to add further volatility investors are now looking towards this morning’s release of domestic GDP where its expected New Zealand’s economy to have grown by 0.6 percent during the second quarter of this year.

• We expect a range today of 0.8050 – 0.8130

Great British Pound:

The Great British Pound has kept a level footing when valued against its US Counterpart over the past 24 hours with positive employment figures assisting the Sterling in the face a notably stronger Greenback. With UK’s jobless rate falling to a six-year low minutes from the Bank of England’s most recent meeting only had a minimal impact despite the fact policy makers remained split when deciding on the timing of potential interest rate rises. Opening this morning virtually unchanged when valued against its US Counterpart at 1.6270 the Sterling is notably stronger against both the Aussie (1.8163) and the Kiwi (2.0105).

• We expect a range today of 1.8120 - 1.8200

Majors:

Treasuries fell whilst the US dollar gained overnight after the US Federal Reserve retained its pledge to keep interest rates near zero for a “considerable time”. In what proved to be one of the most highly anticipated meetings this year, policy makers stopped well short of overhauling its policy statement instead repeating its assessment that a significant amount of slack still remains within the labour market. Whilst there wasn’t a great deal new about the Fed’s stance overall investors have viewed the statement in a positive light pushing the US dollar Index to its highest point in 14 months. In other economic developments US CPI missed forecast at -0.2 percent whilst current account numbers exceeded expectation. In what’s been a tumultuous week for broader currency markets the Greenback is unsurprisingly stronger against the Yen this morning at 108.323 whilst also comfortably outpacing the Euro (1.2860).

Data releases

• AUD: RBA Bulletin  
• NZD: GDP q/q
• JPY: Trade Balance
• GBP: Retail Sales m/m, CBI Industrial Order Expectations, Scottish Independence Vote
• EUR: Targeted LTRO
• USD: Building Permits, Unemployment Claims, Housing Starts, Fed Chair Yellen Speaks, Philly Fed Manufacturing Index