AUD crumbles as Fed re-affirms higher rates

Australian Dollar:

The Australian dollar notched up some significant losses during the overnight session after US Federal Reserve Chair Janet Yellen testified before the House Financial Services Committee in Washington that policy makers remain on track to raise interest rates this year. Having initially traded to an earlier high of 0.7488 when valued against its US Counterpart, the Aussie traded down to a low of 0.7378, its lowest point in over six years. With the US dollar notably stronger across the board this morning the Aussie opens at a level close to its overnight lows. On the outlook this evening developments from Greece will be closely monitored as Greece’s PM fights his own party to secure reforms.

• We expect a range today of 0.7330 – 0.7430

New Zealand Dollar:

The New Zealand dollar has plummeted when valued against its US Counterpart over the past 24 hours with falls initially being triggered off the back of comments from the US Federal Reserve which confirmed US interest rates will be hiked for the first time in 10 years over the coming months. Falling to an overnight low of 0.6583, a long way from its opening level on Wednesday of 0.6704, further weaknesses prevailed after downward projections were made to global dairy prices. With CPI numbers due for release at time of writing, there remains several moving parts as the Kiwi currently swaps hands at a rate of 0.6588.

• We expect a range today of 0.6530 – 0.6650

Great British Pound:

Doing well to maintain its upward trajectory in opposition of a stronger greenback, support for the Great British Pound overnight came in the form wage growth numbers which accelerated at its fastest pace in more than five years. Rallying to a high of 1.5674 when valued against its US Counterpart a labour market report, whilst slightly disappointing only had a minimal impact on Sterling values. Opening stable against the US dollar this morning at a rate of 1.5635 the Great British Pound is going from strength to strength when valued against both the Australian dollar (2.1185) and the New Zealand dollar (2.3713).

• We expect a range today of 2.1120 – 2.1250

Majors:

Dominating forex moves overnight and supporting the markets recent shift back into the world’s reserve currency, US Fed Chair Janet Yellen signalled that a rate hike this year is likely. Whilst Yellen didn’t deviate too greatly from her previous policy statement, broader rhetoric was interpreted as being less dovish, acknowledging improvements across labour markets and the broader economy. In a positive night for the Greenback which was further bolstered by an encouraging manufacturing and industrial production print, the US dollar opens broadly stronger against a handful of its major counterparts. With the markets attention this evening likely to shift towards Greece as its parliament votes on the new debt package, market sentiment threatens to be significantly derailed in the absence of a positive outcome. As investors are forced to once again sit on their hands, the Euro opens lower this morning, currently buying 1.0943 US Cents.

Data releases

• AUD: MI Inflation Expectation 
• NZD: CPI q/q, Business Manufacturing Index
• JPY: No data today   
• GBP: No data today  
• EUR: Greek Gov Debt Crisis Vote, Eurogroup meetings, ECB Press Conference, Minimum Bid Rate    
• USD: Fed Chair Yellen Testifies, Philly Fed Manufacturing Index