AUD strength maintained

Australian Dollar:

Trading to an intraday low of 0.7836 when valued against its US Counterpart after China’s Flash HSBC Manufacturing PMI Index fell to an 11-month low, the move lower for the Australian dollar has proven to be short lived. Briefly touching a four and a half week high of 0.7937 overnight, further dovish tones from the US Federal Reserve have once again weighed heavily on the worlds reserve currency. In what has been a bumpy 24 hour window the RBA is expected to make an assessment of economic conditions today when they deliver their Financial Stability review later this morning. Opening at a familiar level the Australian dollar currently buys 78.72 US Cents.

• We expect a range today of 0.7820 – 0.7910

New Zealand Dollar:

Increasing speculation that further monetary easing and a loosing of their fiscal stance will be required a flash manufacturing index from China yesterday showed that manufacturing activity had slumped to an 11 month low, contracting below the critical 50 mark, a level which indicates an expansion. Given China’s first quarter GDP print is just around the corner, any result which threatens China’s annual full year target of 7 percent would have negative impacts on its closest trading partners. During another session profoundly driven by US dollar moves the Kiwi has traded between a range of 0.7611 – 0.7695 as the New Zealand dollar opens steady buying 76.58 US Cents.

• We expect a range today of 0.7620 – 0.7700

Great British Pound:

The Great British Pound has been heavily sold during overnight trade following a report which showed Britain’s annual inflation rate had hit zero in February. Pushing out interest rate expectations, this is the first time on record that price pressures have been non-existent.  A result which threatens to have a profound impact on Policy makers, the BOE may be forced into stalling any planned increases of the benchmark rate. Slumping by a full US Cent the Great British Pound opens weaker against the Greenback this morning at a rate of 1.4850. Meanwhile in other moves the Sterling weakness was equally as pronounced when valued against both the Aussie (1.8858) and the Kiwi (1.9385).

• We expect a range today of 1.8810 – 1.8910

Majors:

US equities have declined overnight as macro developments bolstered the case for higher interest rates throughout the world’s largest economy. Comfortably surpassing expectation US new home sales jumped 7.8 percent during February, advancing to 539 000, annualised pace, a seven year high. In separate reports US CPI came in on par at 0.2 percent whilst further positivity came in the form of US manufacturing PMI which edged up to a five month peak. Results still not significant enough to trigger substantial US dollar moves investors continue to stay tuned in regards to ongoing US Fed Reserve chatter. Whilst opening steady against the Yen this morning at a rate of 119.690 the 18-nation euro has done well to maintain its value following gains from earlier in the week. Whilst it may be too early to give QE praise, PMI reads throughout the region did hint towards improved economic momentum. In what’s shaping up as another busy session this evening, investors are faced with data releases from the United States as well as a speech from FOMC Member Charles Evans.

Data releases

• AUD: RBA Financial Stability Review
• NZD: Trade Balance
• JPY: No data today
• GBP: No data today
• EUR: German Ifo Business Climate,  
• USD: FOMC Member Evans Speaks, Durable Goods Orders m/m