Greenback sold aggressively

Australian Dollar:

Having initially absorbed the disappointing Consumer Price Index read from China yesterday the Australian dollar traded sideways when valued against its US Counterpart during the domestic session maintaining its value close the 87 US Cents mark. Despite its slow start however the Aussie came to life overnight bolstered by a notable Greenback sell off triggered by a raft of poor key economic indicators from the world’s largest economy. Reigniting concerns over global growth US Retail sales dropped by its biggest margin in four months whilst another report showed manufacturing in the New York region slowed more than projected. Having started the day at a rate of 0.8711 the Australian dollar opens this morning a full cent stronger as it’s currently buys 88.15 US Cents.

• We expect a range today of 0.8760 – 0.8830

New Zealand Dollar:

The New Zealand dollar has advanced in a big way when valued against its US Counterpart over the past 24 hours, touching a three week high amid heightened concerns which surround the lack global growth. Whilst the prices of dairy products also rose at the most recent auction overnight the key driver behind yesterday’s move stemmed from the view that investors may have gotten ahead of themselves having plunged substantial funding back into US dollar dominated assets over the past several months. Whether the sell-off this week proves to be the start of a bigger correction economic indicators across the board this week have hinted towards a bumpy ride. Opening this morning a staggering one and a half cents stronger when valued against its US Counterpart at a rate of 0.7993, the key resistance level of 0.8000 remains only a stone’s throw away.

• We expect a range today of 0.7960 – 0.8030

Great British Pound:

In a positive note not only for Britain’s economy but the global economy UK unemployment fell more than forecast to its lowest level in six years. Dropping from 6.2 percent in August to 6.0 percent in September policy makers will be keen to see continued strength within the labour market which would fly in the face of weaker manufacturing and production numbers. Strengthening to an overnight high of 1.6067 when valued against its US Counterpart the Sterling is stronger upon open this morning at 1.5973. Meanwhile against both the Australian dollar (1.8116) and the New Zealand Dollar (1.9979) the Sterling is weaker.

• We expect a range today of 1.8080 – 1.8150

Majors:

The dollar index, which measures the greenback against a basket of currencies, dropped to its lowest level in close to a month overnight, in what’s been a volatile 24 hour window for broader currency markets. With China’s CPI read of 1.6 percent falling short of expectation that was only the tip of the iceberg as manufacturing in the Federal Reserve’s New York region slowed as did  US Retail Sales which dropped to a four month low. Highlighting just how much stress there lies within financial markets European stocks fell the most in almost three years with sentiment only really favouring a retreat back into the Japanese Yen. In currency happenings the USD/JPY is significantly lower this morning at 106.016 whilst the extent of the rout overnight can be seen through the Euros value which opens 150 basis points higher when valued against the greenback at 1.2807. With the economic calendar globally this evening looking just as busy volatility levels are expected to remain heightened.  

Data releases

• AUD: MI Inflation Expectations, RBA Assist Gov Debelle Speaks
• NZD: Business NZ Manufacturing Index
• JPY: No data today
• GBP: No data today
• EUR: Final CPI y/y, German Buba President Weidmann Speaks
• USD: FOMC Plosser Speaks, Unemployment Claims, Capacity Utilization Rate, Industrial Production m/m, Philly Fed Manufacturing Index