Australian Dollar:
The Australian dollar closed higher Friday buoyed by General USD weakness and continued support following Thursday’s upbeat employment data. Touching intraday highs of 0.7836 the Aussie finished the week 2 cents above Monday’s open having broken key resistance levels. Ranges will be tested todays as early direction will stem from the market’s reaction to the Peoples Bank of China and its surprise decision to reduce the benchmark interest rate a full 100 basis points or 1 percent to 18.5% on Sunday. The proactive move is aimed to flood banks with liquidity and prop up domestic demand in a bid to maintain the targeted 7% growth rate through 2015. With resistance still in play on approaches to 0.7840/50 we look to Reserve Bank minutes tomorrow for further monetary policy insight.
We expect a range today of 0.7620 – 0.7850
New Zealand Dollar:
The New Zealand dollar advanced into the close on Friday as general U.S dollar weakness helped drive the currency through 0.77. With little domestic data on hand the Kiwi found direction in offshore stimuli benefitting from a selloff in the world’s base currency as investors looked to short long positions as expectations of a 3rd quarter Federal reserve rate adjustment thin. Opening this morning buying 0.7693 US cents attentions turn to quarterly CPI numbers for direction through Monday.
We expect a range today of 0.7580 – 0.7780
Great British Pound:
The Great British Pound broke above 1.50 Friday touching five and a half week highs of 1.5043. Despite a decline in average hourly earnings and a poor claimant count read Sterling found support in general USD weakness as investors sold down the world’s base currency. Faced with the prospect of an extended period of accommodative Federal Reserve monetary policy markets looked to shorten USD positions. With little on the domestic calendar attentions now turn to the ever looming May 7 election. Volatility has surged to 5 year highs as the election is poised to fall either way with the latest polls showing voters are split recording 32% for both labour and the Lib Dems.
We expect a range today of 1.9010 – 1.9410
Majors:
Stronger than anticipated consumer sentiment and retail sales failed to lift the U.S dollar off 4 week lows Friday as investors extended the timeline of expectation linked to a Federal Reserve upward rate adjustment. Despite a brief relief rally in early trade markets continued to dump the world’s base currency as upbeat data was not enough to shrug of a string of limp macroeconomic indicators that plagued the economy throughout first quarter. Analysts are wary of a retreating Greenback vulnerable to downward corrections as expectations of a June rate adjustment are thin and traders are forced to reduce long positions. The selloff helped the Euro touch 4 week highs at 1.0849 marking a 2 cent weekly advance. Further upward swings will be hampered by concerns surrounding Greek debt as the newly form Syriza government fails to supply reform measures strong enough to obtain the next tranche of troika assistance. Attentions now turn to IMF meetings Monday for direction and guidance as the economic calendar offers little to stimulate direction.
Data releases:
AUD: No Data
NZD: CPI q/q
JPY: Tertiary Industry Activity m/m
GBP: Rightmove House Price Index m/m
EUR: German PPI m/m and German Buba Monthly Report
USD: No Data