Aussie range bound amidst neutral RBA stance

Australian Dollar:

The Australian Dollar opens this morning relatively unchanged buying 0.8727 U.S cents. The RBA minutes offered little for investors as the Central Bank maintained its neutral policy stance through November and appears unlikely to adjust its monetary policy in the short term. Bouncing between intraday lows of 0.8681 and highs of 0.8746 investors seem range bound in the absence of any major market moving catalyst. Attentions now turn offshore in the absence of headline domestic data with US FOMC meeting minutes Wednesday and Chinese Manufacturing reports Thursday guiding direction into the end of the week.

• We expect a range today between 0.8620 – 0.8800

New Zealand Dollar:

The New Zealand Dollar edged higher throughout domestic trade yesterday as markets positioned themselves ahead of the GDT Price Index report and an expected stabilisation in Global Dairy Prices. Touching intraday day highs of 0.7973 the Kiwi again ran out of steam when approaching 0.80. The NZD’s advance was all but retracted when the Global Dairy Trade Price Index showed an unexpected decline driving the currency lower and we open this morning buying 0.7975 US Cents. Eyes now turn to PPI output reports due Thursday for further domestic guidance and direction.  

• We expect a range today of 0.7810 – 0.7990

Great British Pound:

Sterling moved lower against most major trading pairs Tuesday touching monthly lows against its European and US counterparts having depreciated 2.2% in just the past week. Fuelled by speculation the UK economic recovery is wanning investors have adjusted their expectations of when the BoE will look to raise interest rates. Tuesday’s stable CPI report only affirmed inflationary pressures remain low and with room to force price action lower still markets have shifted toward a bearish bias. Attentions now turn to the Bank of England’s MPC meeting minutes for November as the directional driver through trade on Wednesday with investors largely expecting the Central Bank to maintain its recent dovish tone.

• We expect a range today between 1.7800 – 1.8010 

Majors:

The Euro rallied against its US counterpart through trade on Tuesday after an unexpected upswing in German Economic Sentiment. The ZEW report showed investor sentiment rose for the first time in 11 months with markets citing stronger than expected 3rd quarter GDP as a driver raising hopes of an overall European recovery. The Euro rallied back through 1.25 touching intraday highs of 1.2541 before gains were pared by better than expected US PPI data. The string of positive U.S data adds further impetus to the underlying strength of economic recovery but the current bullish run may be running out of steam as markets begin to price in a Federal Reserve interest rate hike for mid-2015. In other news the Japanese Yen moved lower throughout trade on Tuesday as Prime Minister Shinzo Abe scheduled an early election and suspended plans to increase sales taxes. Abe will dissolve parliament on November 21 in a bid to find additional support in implementing his Abenomics mandate and increase quantitative easing packages. The Yen has depreciated some 7.5 percent in the last 30 days and is the worst performer among the world’s 10 most developed economies. With heavy stimulus expected to continue investors can be expected to maintain their bearish bias. Looking ahead attentions now turn to the Central Banks of Japan and the US as BoJ Press Conference and Monetary Policy Statement and the FOMC meeting minutes’ drive trading direction through Wednesday.

Data releases

• AUD: MI Leading Index
• NZD: Global Dairy Trade Price Index
• JPY: Monetary Policy Statement, BoJ Press Conference and All Industries Activity
• GBP: MPC Official Meeting Minutes
• EUR: Current Account
• USD: Building Permits, Housing Starts, FOMC Minutes and Crude Oil Inventories.