Greenback weakness fuels short term AUD consolidation

Australian Dollar:

The Australia Dollar enjoyed a mixed session bouncing between support and resistance. Increased inflation expectations helped fuel an early upward push and the Aussie tagged intraday highs of 0.7913 before resistance on advances above 0.7910 forced a short term sell off. Edging lower in the lead up to North American trade the AUD found support at 0.7860 and took advantage of general Greenback weakness. Reluctance to extend USD long bets should help the AUD consolidate above 0.78 as attentions turn to key U.S inflation numbers and Fed Chair Janet Yellen with the market seeking guidance on the timing of Fed policy adjustments.

• We expect a range today of 0.7800 – 0.8010

New Zealand Dollar:

The New Zealand dollar edged upward Thursday despite a blank domestic economic calendar. Technical supports thwarted market attempts to force the Kiwi through lows at 0.7280 and the commodity driven currency took advantage of general USD weakness recouping ground and advancing to touch intraday highs of 0.7351. Attentions will again be directed offshore as U.S CPI and Central Bank figureheads dominate the global macroeconomic calendar leading into the weekend.

• We expect a range today of 0.7280 – 0.7450

Great British Pound:

The Great British Pound advanced Thursday rallying strongly on the back of a better than anticipated retail sales report. Consumer spending jumped 1.2% in April comfortably surpassing analysts’ expectations and pushing Cable back through 1.5650 to intraday highs just shy of 1.57. The move was consolidated as mixed U.S data prompted a Greenback sell off ahead of today’s crucial U.S CPI print and investors turn to BoE Governor Mark Carney for forward monetary policy guidance.     

• We expect a range today of 1.9675 – 2.0175 

Majors:

The Greenback rally stalled overnight as investors reassessed positions after another series of mixed macroeconomic data announcements. Despite a dip in average unemployment claims existing home sales and manufacturing throughout the Mid-West both fell well short of analysts’ expectations prompting a reluctance to deepen long positions. The selloff saw the Euro move back through 1.11 as a stronger than anticipated Manufacturing read bolstered confidence in activity across the Eurozone. The 19 nation block unit found added support in a narrowing yield gap as German bunds rallied. The tapering spreads have helped fuel the Euros run back from decade lows at 1.05 and we saw intraday highs of 1.1181. The advance was however capped with markets avers to lengthen positions as the ECB prepares to flood the market printing more money to increase the pace of bond purchases throughout June. Attentions now turn to Central Bank Figureheads and Draghi and Yellen both front the wires while U.S CPI will act as the primary fundamental driver on the docket for Friday.

Data releases:

• AUD: No Data
• NZD: No Data
• JPY: Monetary Policy Statement and BoJ Press Conference
• GBP: Public Sector Net Borrowing, MPC Member Shafik and BoE Governor Carney Speaks    
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• EUR: German Final GDP q/q, ECB President Draghi Speaks, German Ifo Business Climate and Italian Retail Sales.

USD: CPI m/m,Core CPI and Fed Chair Janet Yellen Speaks