RBA jawboning pressures the Aussie

Australian Dollar:

The Australian dollar continued to drift lower on Tuesday after China’s CB Leading index failed to impress. The Aussie broke into the US85 cent range through daily trade down from the open of 0.8613, however movement was light in anticipation of RBA Deputy Governor Lowe’s talk later on. Lowe sent the Aussie spiralling as he talked about potential further rate cuts under the record low they currently sit at, saying the RBA would make the move if necessary.  Overnight offshore data could not help the higher yielding currency as it opens this morning nearly a cent lower at 0.8525 against the Greenback. Today will see construction figures released locally however eyes will be firmly focused on an array of high impact US data later tonight.

• We expect a range today of 0.8485 – 0.8545

New Zealand Dollar:

The aggressive monetary easing by China continued to wane on Tuesday and the NZ dollar maintained a negative course against the Greenback. Inflation expectations printed as expected with the results having a muted affect leading the higher yielding Kiwi to continue to remain under pressure. The NZD dropped nearly half a cent during Asian trade from the daily open of 0.7861 and overnight persisted to slide despite mixed releases from the US. The Kiwi opens this morning just above the US78 cent handle and with no data to provide direction today investors will watch US numbers overnight for direction.

• We expect a range today of 0.7770 – 0.7850

Great British Pound:

The British Pound was able to remain flat against the US dollar on Tuesday after an array of local and offshore numbers lead the Sterling back to daily opens. The GBP began to drift lower after a soft mortgage approval release and fell further after an inflation report hearing showed economic concerns for the UK. Bank of England Governor Carney mentioned increased global risk from a political and economic point of view was weighing on the current inflation target and that the BoE is expecting a drop below 1 per cent. Overnight US numbers saw the Greenback sold off late in trade with worrying consumer confidence figures leading the GBP to reach just above Tuesdays open at 1.5707. The Sterling did however manage to extend gains against the higher yielding AUD(1.8419) and NZD(2.0107) with all eyes now focused on the local second estimate GDP for direction.

• We expect a range today of 1.8380 – 1.8460

Majors:

The Japanese Yen has been under close watch over the last couple weeks sinking sharply lower as the Bank of Japan has made tactical moves introducing further stimulus to help the struggling economy. In the BoJ’s meeting today the minutes have shown opposition to further easing with concerns primarily over the side effects to the aggressive program in place. The Yen reacted quickly showing a slight reprieve to what has been a tough few weeks rallying against most major currencies.

In the US overnight investors witnessed a session of volatile trade as the night began with upbeat preliminary GDP figures sending the US dollar higher. Unfortunately for the safe haven currency an unexpectedly disappointing consumer confidence release to end trade overshadowed the strong third quarter growth showing confidence falling to 88.7 this month from 94.1 in October. The poor data saw the Greenback sold off across the board dropping nearly half a cent against the Euro. Tonight all eyes will be fixated on US numbers as there is a myriad of high impact announcements to be released in quick succession. 

Data releases: 

• AUD: Construction Work Done q/q
• NZD: No Data
• JPY: No Data
• GBP: Second Estimate GDP q/q, Prelim Business Investment q/q, Index of Services 3m/3m, CBI Realized Sales
• EUR: German Import Prices m/m, German 10-y Bond Auction,
• USD: Core Durable Goods Orders m/m, Unemployment Claims, Core PCE Price Index m/m, Durable Goods Orders m/m, Personal Spending m/m, Personal Income m/m, Chicago PMI, Revised UoM Consumer Sentiment, Revised UoM Inflation Expectations, New Home Sales, Pending Home Sales m/m, Crude Oil Inventories, Natural Gas Storage