Australian Dollar:
The Australian dollar fell one cent yesterday to close right on 0.7100 after weaker than expected CPI data and the Federal Reserve putting a December rate hike into view. The Australian lost half a cent against the USD when the CPI q/q data was released during the Australian trading day and then lost another 50 points late in Wall Street session. The Federal Reserve statement mentioned that in the December meeting it would look to employment data and inflation data as to whether or not they would raise rates which the market has taken as an indication that they a rate increase this year is possible. With little data coming out today locally the market will not look to the advance GDP data and unemployment claims coming out tonight in the US.
We expect a range today of 0.7020 – 0.7200
New Zealand Dollar:
The Reserve Bank of New Zealand have kept the official Cash Rate at 2.75% along with market expectations. After a tough day for the New Zealand dollar, which lost ground with most major currencies when the Federal Reserve statement came out indicating a potential rate increase next month. The statement released by the Reserve Bank of New Zealand gave the NZD a bit of support and early moves have seen the NZD reclaim most of the ground lost after the US Federal Reserve’s rate decision and now sits at 0.6696 against the USD. The advance GDP data and the unemployment claims that will come out overnight will be the main focus with not much data coming out during trade today.
We expect a range today of 0.6630 – 0.6780
Great British Pound:
The Great British Pound closed up against the AUD yesterday after following a similar pattern to the USD strength against the AUD. Strengthening during the Australian session after the Australian CPI q/q data was released, while remaining subdued during the European trading session, before strengthening again of the back of the Fed’s statement in which they stated that they would look toward unemployment and inflation data when making the decision on the cash rate next month. With limited data coming out locally the focus will once again be on the US data later on in the day.
We expect a range today of 2.1280 – 2.1600
Majors:
The Greenback rose against most major currency pairs yesterday after the Federal Reserve kept rates on hold. The result of keeping the interest rate on hold was not unexpected however the statement that was released alongside this decision was more hawkish than expected. Instead of focusing on the weakness in the global markets specifically China and the Eurozone they have said that the main focus in raising rates will be on local employment and inflation data is moving to align with their objectives. The Euro and JPY both fell sharply on the news after remaining relative subdued in the lead up to the decision.
Data releases:
AUD: Import Prices q/q
NZD: No Data
JPY: Prelim Industrial Production m/m
GBP: Net Lending to Individuals m/m
EUR: German Prelim CPI m/m, Spanish Flash CPI y/y, German Unemployment Change
USD: Advance GDP q/q, Unemployment Claims