Australian Dollar
Expected Range 0.6930 – 0.7080
The Australian Dollar edge higher throughout trade on Wednesday buoyed by an unexpected uptick in trimmed mean inflation and paring of positions ahead of the FOMC rate statement. Inflation through the last quarter to December 2015 outstripped market expectations while Trimmed Mean CPI (adjusted change in price of goods and services having excluded the most volatile 30%) jumped 0.3% through the quarter marking a 0.6% price increase. The AUD rallied strongly in the wake of the upbeat print solidifying gains above 0.70 and touching highs at 0.7040 in the immediate aftermath. The Aussie continued to edge upward through European and North American trade as investors pared position and sold down USD assets ahead of the Federal Reserve’s FOMC rate statement. Touching intraday highs at 0.7081 the AUD slid lower after Fed officials elected to maintain the current policy platform. After a knee-jerk uptick the Aussie started to slip as market absorb Federal Reserve commentary that larger met expectations and left room for a potential policy shift come March. At time of writing the AUD buys 0.7013 U.S cents and attentions again turn offshore with little domestic price action on hand through Thursday.
New Zealand Dollar
Expected Range 0.6350 – 0.6550
The New Zealand dollar offered little through trade on Wednesday as investors looked to pare positions ahead of key Central Bank policy announcements. Marking time and trading between 0.6480 and 0.6531 for much of the day the NZD opens this morning markedly lower having suffered a knee-jerk sell off in the wake of the FOMC rate announcement and statement. The Kiwi plunged a full cent, buying 0.6420 U.S cents at time of writing, after Fed chair Janet Yellen confirmed rates would remain unchanged before delivering a policy statement that largely met market expectations. Attentions then shifted to this morning’s RBNZ OCR announcement and rate report. With many analyst anticipating a shift in policy rhetoric and a move toward a more accommodative bias the suggestion that further policy easing may be required over the coming year was largely expected. With rates unchanged we now turn our focus to domestic trade balance numbers for direction through Thursday.
Great British Pound
Expected Range 2.0150 – 2.0500
The Great British Pound edged back below 1.43 in the wake of the Fed and FOMC rate statement plunging a 100 points to 1.4246 at time of writing. The much anticipated follow up to December’s Fed rate hike saw investors’ expectations largely placated. The FOMC left rates unchanged acknowledging changes in the global economic environment (namely plunging oil prices) were weighing on inflation and labour market performance. While effectively closing the door on a rate change come March the Fed left enough scope in “monitoring the economic outlook” to amend its policy stance should conditions improve. Attentions now turn to preliminary GDP numbers for direction through Thursday.
Majors
Expected Range N/A
The US dollar has recouped much of the losses it relinquished in the lead up to the Federal Reserve’s FOMC rate statement despite no change in monetary policy and a somewhat dovish undertone. In the face of widespread global volatility, plunging oil prices and uncertainty surrounding the growth prospect of the world’s 2nd largest economy it was not surprising the Federal Reserve left rates unchanged. Markets and investors had largely anticipated the move and consequently focus shifted the accompanying state and policy statements. The acknowledgment of global economic uncertainty was expected and the shift in rhetoric surrounding inflation while dovish was principally priced in. Essentially the Fed delivered what most analyst anticipated fundamentally closing the door on any expectations of a March rate amendment but at the same time leaving room and scope for a shift in policy should the current economic outlook improve. The Greenback advanced against riskier assets but continues to secede ground against haven currencies. Attentions now turn to the BoJ as central bank policy continues to dominate the docket. While we anticipate no change to the current stimulus platform underlying calls for an increase to monetary easing continue to put pressure on policy makers.