Australian Dollar:
In a day billed with much promise for volatility the Australian dollar let investors down struggling to move far from the open of 0.8223 against its US counterpart. RBA assistant Governor Debelle talked mainly about liquidity while the Aussie refused to budge in anticipation of the monetary policy meeting minutes and Chinese numbers. The minutes did not surprise and talked about how the Australian dollar will need to fall further to adjust to sinking commodity prices. The board continued to deem the current monetary policy appropriate and disregarded calls for further cuts for the time being, reiterating the economic growth struggles are not lying with the cash rate and access to capital. Chinese data disappointed and the Aussie remained steady while overnight soft US data lead the Aussie to rally to highs of 0.8275 before running out of steam to open today marginally weaker at 0.8214. Today investors will focus on high impact US CPI figures for direction
- We expect a range today of 0.8165 – 0.8245
New Zealand Dollar:
The New Zealand dollar traded in a tight range on Tuesday with a lack of domestic data to provide direction for the second consecutive day. Investors were speculating Chinese numbers could help provide guidance to the lifeless Kiwi however failed to move the NZD after contractionary Chinese Flash manufacturing numbers were released. Overnight US data missed the mark and a 2.4 per cent increase in the global dairy trade index helped the Kiwi reach highs of 0.7845, opening this morning half a per cent stronger at 0.7782. Today current account figures are released and a heavy run of overnight US data will provide direction.
- We expect a range today of 0.7740 – 0.7820
Great British Pound:
The British Pound was one of the strongest performing currencies overnight gaining over 100 points against its US counterpart despite worse than anticipated inflation data. The Sterling took the lead from a weaker than expected US housing market, rallying to highs of 1.5775 opening this morning substantially stronger at 1.5745. In a similar scenario the UK’s CPI numbers did not get in the way of a rally against the higher yielding AUD(1.9157) however strong global dairy trade numbers saw the NZD(2.0187) take some of the earlier part of the week’s losses back. Tonight all eyes in the UK will be on the claimant count change along with the average earnings index and minutes from the Bank of England’s most recent monetary policy meeting.
- We expect a range today of 1.9120 – 1.9200
Majors:
The Euro joined in with most majors taking full advantage of poor US numbers overnight however it was the added boost of strong domestic data which gave the struggling EUR a further push higher. German ZEW economic sentiment was the highlight from European trade with the numbers released coming in close to twice what was forecast. The real rally for the Euro came after US housing data missed the mark showing building permits and housing start numbers to be worse than anticipated. The poor data comes a day before the US Federal Reserve is to release a statement on monetary policy and although it is widely expected for no change investors will watch closely for clues as to a time frame to an adjustment.
Data releases:
- AUD: MI Leading Index
- NZD: GTD Price Index, Current Account
- JPY: Trade Balance
- GBP: Average Earnings Index 3m/y, Claimant Count Change, MPC Official Bank Rate Votes, MPC Asset Purchase Facility Votes, Unemployment rate
- EUR: Final CPI y/y, Final Core CPI y/y
- USD: CPI m/m, Core CPI m/m, Current account, Crude Oil Inventories, FOMC economic projections, FOMC statement, Federal Funds Rate, FOMC press conference
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