US rate talk dominates, US Dollar falls

Australian Dollar:

In what’s been a remarkable start to the week demand for the Australian dollar has been significantly bolstered over the past 24 hours as the US dollar has fallen amid expectations the Federal Reserve will raise interest at a slower rate than initially thought. Breaking down barriers up above the 78 US Cents mark the Australian dollar has managed to consolidate 100 basis points worth of gains this morning as it currently buys 78.80 US Cents. In an environment so greatly dictated by US policy makers and subsequent US dollar moves the week ahead promises to be a volatile one ahead of further rhetoric from US Fed member’s as well key macro developments in the form of US CPI and GDP.   

• We expect a range today of .7840 – 0.7910

New Zealand Dollar:

The New Zealand dollar opens notably stronger when valued against its weaker US counterpart this morning following comments by the US Fed Vice Chairman who stated that a smooth upward path in the federal funds rate would be very difficult to achieve. Further hinting that investors to date have been overly focused on the timing of their first hike, last night’s comments suggest there remains growing divide over what the medium-term outlook will be. Having started the week at a rate of 0.7564 the New Zealand dollar opens this morning just short of a full cent stronger as it currently buys 76.54 US Cents. On the horizon today investors will be looking towards the HSBC Flash Manufacturing PMI from China for early direction.

• We expect a range today of 0.7620 – 0.7690

Great British Pound:

The Great British Pound has failed to capitalise on a weaker Greenback overnight falling when valued against the worlds reserve currency. Weighed down by a report which showed British factory orders stagnated unexpectedly in March, notching up its worst report in five months, a lack of offshore demand has also played its role. In what’s shaping up as an important 24 hour window investors will be looking towards this evenings inflation result. Opening broadly weaker the Great British Pound is lower against the Greenback (1.4938), the Aussie (1.8950) and the Kiwi (1.9512).

• We expect a range today of 1.8900 – 1.9000

Majors:

It’s been a session dominated by USD sell signals overnight after Federal Reserve Vice Chairman Stanley Fisher communicated that whilst interest rates will need to be raised from near zero before the end of the year subsequent increases won’t be uniform nor predictable. Communicating the path to higher ground is still a data dependent one, the US dollar has maintained it downward run following last week’s drop (its largest since October 2011). In other US dollar related developments the purchase of existing dwellings increased by a mere 1.2 percent last month, its lowest increase in nine months. Lower against the Yen this morning at a rate of 119.828 the 18-nation euro has enjoyed further gains stronger at a rate of 1.0950. Whilst feedback from market participants to date suggest the implementation of the ECB’s most recent stimulus regime has been smooth the US Fed’s exit to may prove anything but.

Data releases

• AUD: CB Leading Index
• NZD: No data today
• JPY: No data today
• GBP: CPI y/y, PPI Input m/m, RPI y/y
• EUR: French Flash Manufacturing PMI, French Flash Services PMI, German Flash Manufacturing PMI, German Flash Services PMI, Flash Manufacturing PMI, Flash Services PMI
• USD: CPI m/m, Core CPI m/m, Flashing Manufacturing PMI