AUD recovers from 4-year low

Australian Dollar:

The Australian dollar initially traded lower yesterday when valued against its US Counterpart after August retail sales surprisingly only grew by 0.1 percent, a number comfortably below the consensus forecast of 0.4 percent. With falling real wages and rising unemployment consumers steered clear of major department stores during August, a move indicative over of a broader pessimistic outlook. Tumbling to its lowest level in eight-months the Australian dollar reached a late afternoon low of 0.8666, a low however which proved to be relatively short-lived as European and US Investors entered the frame. Hinting that US dollar momentum may be faltering the Australian dollar opens this morning in a familiar position to yesterday buying 87.29 US Cents with Building Approval and Trade Balance numbers due for release at 11:30am expected to provide an added dose of volatility.

• We expect a range today of 0.8680 – 0.8770

New Zealand Dollar:

Weighing heavily on the New Zealand dollar upon open this morning International dairy prices fell back to levels not seen since May 2012. Delivering a fresh wave of selling the New Zealand dollar already prone and vulnerable to additional downside reached a low of 0.7758 when valued against its US Counterpart, half a cent below its opening level. Despite weak indicators from the United States overnight which assisted in dragging the greenback lower the Kiwi is lower this morning as it currently buys 77.85 US Cents   

• We expect a range today of 0.7740 – 0.7820

Great British Pound:

The Great British Pound has been sold off in overnight trade after a report showed manufacturing grew at its slowest pace in 17 months. With UK equities also sliding for a third consecutive day the Sterling slumped to a low of 1.6160 when valued against its US Counterpart comfortably half a cent below its opening level. Adding weight to the view that Britain’s economic momentum maybe faltering neighbouring Europe is also providing few favours with the MPC already having signalled that interest rate rises are just around the corner. Opening lower against the Greenback this morning at a rate of 1.6182 the Sterling is marginally stronger against both the Aussie (1.8535) and the Kiwi (2.0790)

• We expect a range today of 1.8500 – 1.8580

Majors:

Macro indicators released from the United States overnight fell short of expectation after an ISM Manufacturing PMI read of 56.6 fell short of the forecast number of 58.6. With the US Federal Reserve still on track to end their bond buying program this month, treasuries continued their upward trajectory whilst equities fell, having lost a staggering $200 billion in worth over the past three months.  In currency moves the Greenback pulled back when valued against the Yen lower this morning at 108.867 whilst the Euro lost 0.2 percent up against the world’s reserve currency after figures showed euro-area factories reduced prices by the most in more than year. Providing further headwinds for the 18-nation Euro an indicator of German Manufacturing also shrank, underpinning the mounting challenge the ECB faces in its efforts to spur growth. In what’s set to steal the limelight this evening ECB President Mario Draghi is expected to provide additional detail surrounding its bond program announced last month.  

Data releases

• AUD: Trade Balance, Building Approvals m/m
• NZD: GDT Price Index
• JPY: Monetary Base y/y
• GBP: Construction PM
• EUR: Minimum Bid Rate, ECB Press Conference
• USD: Unemployment Claims, Factory Orders m/m