Support for AUD as investors reduce USD long positions

Australian Dollar:

The Australian Dollar edged higher Friday and opens this week stronger buying 0.7841 U.S cents. With no domestic data on hand to drive direction Friday the Australian dollar found support in Greenback weakness. Traders sold off USD assets reducing long positions and bets the USD will advance ahead of Fed Chair Janet Yellen’s testimony to the Senate Banking Committee. Investors are preparing for a dovish undertone similar to the January minutes as the Central Bank heads offers a monetary policy update and analysts extend expectations of a possible interest rate hike. The local docket is again absent of headline data events and we expect the AUD to remain range bound throughout much of Monday’s trade.

• We expect a range today of 0.7620 – 0.7950

New Zealand Dollar:

The New Zealand dollar offered little to investors Friday holding onto the gains enjoyed earlier in the week and cementing itself above 0.7500 U.S cents. Supported by general Greenback weakness investors shrugged off concerns the Global Dairy Market will likely remain stagnant for some time with Chinese demand flat and European farmers looking to increase supply before an EU milk quota is abolished in April. Opening this morning buying 0.7515 focus turns to Trade Balance reports Thursday as the big ticket item driving local direction.

• We expect a range today of 0.7450 – 0.7680

Great British Pound:

The Great British Pound closed the week lower after reports showed retail sales fell throughout January. While much of the market anticipated a slowdown post-Christmas consumer led spending declined 0.3% missing the -0.1% anticipated and suggests the savings in oil and energy will not be enough to drive consumer led growth.  Touching intraday lows of 1.5343 Sterling found support and was bolstered by a reduction in public sector debt and government borrowing. Opening this morning at 1.5434 attentions turn to GDP numbers Thursday as the primary ticket on the docket in the week ahead.

• We expect a range today of 1.9350 – 2.0050

Majors:

The Greenback moved lower into the end of the week as investors and speculators reduced their long positions with bets favouring the USD falling to a seven week low. A string of poor macroeconomic indicators throughout February have raised concerns the US economy may falter in the face of stagnant global growth and extended some analysts bets the Fed will delay its first rate hike in a decade.

The Euro rallied throughout trade on Friday as Eurogroup minister agreed terms in extending the Greek bailout program for another 4 months. An eleventh hour deal was struck Friday which saw Greek Prime Minister Tsipras concede to creditor demands; forced to back down and accept the austerity measures or risk a collapse in the country’s banking system. The New Greek vanguard appears to have one itself few friends over the past 10 days isolating many Eurogroup ministers. Touching intraday highs of 1.1414 the 19 nation shared unit was further bolstered by improved Manufacturing PMI adding to optimism and support across the currency bloc.

Attentions now turn to German business confidence Monday for direction into the new week. 

Data releases

• AUD: No Data              
• NZD: Credit Card Spending y/y
• JPY: Monetary Policy Meeting Minutes  
• GBP: CBI Realised Sales
• EUR: German Ifo Business Climate
• USD: Existing Home Sales