IMF lowers Global Growth Forecast

Australian Dollar:

Demand for the Australian dollar was initially bolstered yesterday after figures showed China’s economy expanded by 7.3 percent last year, beating the consensus forecast of 7.2 percent. Whilst reaching a late afternoon high of 0.8242 when valued against its US Counterpart the move higher proved to be short lived as concerns surrounding the broader global growth outlook overshadowed China’s solid 2014 performance. Opening this morning 40 basis points lower at a rate of 0.8170 sustained rallies up above the 82 US cents mark have once against proved difficult with a strengthening US dollar also playing its part.

• We expect a range today of 0.8140 – 0.8210

New Zealand Dollar:

Despite dairy prices which have continued to improve at this morning’s global dairy trade auction mixed with a positive GDP print from China yesterday, the New Zealand dollar has still struggled to garnish a great deal of interest from investors over the past 24 hours. Broadly weighed down by the IMF which made its steepest cut to its global-growth outlook in three years, China’s GDP result whilst above expectation still represents the lowest level of economic expansion in 24 years. Opening only marginally weaker this morning at a rate of 0.7674 when valued against the US dollar Consumer Price information scheduled for release during the early parts of this morning remains set to play a key role in determining short-term direction.

• We expect a range today of 0.7630 - 0.7720

Great British Pound:

UK stocks have advanced for a fourth consecutive day amid optimism European policy makers will launch an aggressive balance sheet expansion when they meet on Thursday. With little on offer domestically overnight investors have been left to sit on their hands ahead of the Bank of England Policy meeting this evening followed by the ECB tomorrow. Opening marginally stronger against the Greenback this morning at a rate of 1.5134 the Great British Pound has notched up some impressive gains when valued against both the Australian dollar (1.8542) and the New Zealand Dollar (1.9736).

• We expect a range today of 1.8500 – 1.8600

Majors:

The S&P 500 advanced overnight, whilst Oil maintained its downward trajectory during a session dominated once again by ECB expectations as well as news that the International Monetary Fund reduced its global growth outlook by its largest amount in three years. Forecasting the world economy will grow by a mere 3.5 percent during 2015, a heightened slowdown has been predicted in all major economies with the exception of the United States which has been upgraded from 3.1 to 3.6 percent. During a session which favoured a move back in US dollar dominated assets the Greenback has strengthened against the Yen (118.807) whilst also outpacing the Euro (1.1548). In what’s been a familiar outline for all of this week investors continue to speculate that European policy makers will go “all in” when they meet on Thursday a move likely to substantially shift the global monetary policy dynamic.

Data releases

• AUD: No data today
• NZD: CPI q/q, GDT Price Index
• JPY: Monetary Policy Statement, BOJ Press Conference
• GBP: Claimant Count Change, MPC Official Bank Rate Votes, Unemployment Rate
• EUR: No data today
• USD: Building Permits, Housing Starts