Australian Dollar:
The Australian Dollar was one of the markets stronger performers through trade on Thursday bouncing through resistance at 0.7150 and rallying to touch intraday highs at 0.7214. With little domestic data to hand the Aussie was buoyed by investors repositioning USD longs in the wake of the Fed’s FOMC meeting minutes. Despite an underlying bullish tone and clear signals a December rate hike is largely possible some analyst found dissent among the Committee ranks and hastily looked to reduce Greenback exposures. The downturn did little to reverse the underlying bullish trend fuelling USD gains and we anticipate room for new rallies to form in the weeks ahead as long as the Fed remains on track to raise rates next month. A shift in Fed policy could prompt an AUD rally back through 0.7250 toward 0.73 and 0.74 as markets scramble to push back IR expectations. Attentions today turn offshore again with little of note to drive domestic direction into the weekend.
We expect a range today of 0.7080 – 0.7280
New Zealand Dollar:
The New Zealand dollar rallied strongly through trade on Thursday recouping some of the week’s earlier losses and touching intraday highs at 0.6592. The Kiwi found support in investors seeking a higher yield return having repositioned USD exposures in the wake of the Fed’s FOMC meeting minutes while a surprise uptick in PPI input and output helped firm the rally. Attentions today turn offshore to key central bank commentary as the divergence of monetary policy continues to drive and govern direction.
We expect a range today of 0.6450 – 0.6650
Great British Pound:
The Great British Pound, much like the majority of its G-10 counterparts, rallied against the Greenback through trade on Thursday. Sterling moved back through 1.53 touching intraday highs of 1.5335 despite a larger than anticipated fall in domestic retail sales. Monthly consumer spending fell 0.6% through October and highlights the inflationary pressures plaguing the UK economy. Cable however found support in the slightly ambiguous FOMC meeting minutes wherein some analysts hinted at a crack in the collective push for a December rate hike. Attentions now turn to Fed and ECB commentators and policy guidance leading into the weekly close.
We expect a range today of 2.1050 – 2.1450
Majors:
The Greenback eased lower against a broad base of currencies through trade on Thursday. Having hit a 7 month high on Wednesday the Dollar Index moved nearly 1 % lower to 98.951 as investors looked to reposition USD longs in the wake of the Fed’s latest FOMC meeting minutes. While the underlying tone of the meeting accounts was upbeat and signalled a December rate hike remains a strong possibility some analysts saw reason to question the unity of the board. It seems not all committee members are of the opinion recent data sets have recovered sufficiently to warrant a rate amendment, while those members championing a rate adjustment are careful to highlight policy changes will be gradual. EUR/USD moved back through 1.07 despite the release of largely dovish October meeting minutes touching intraday highs of 1.0763 while USD/JPY lost almost 1% after the BoJ elected to maintain the current monetary policy platform. Having again slipped into recession many investors expected the BoJ would be forced to do more to stimulate the economy and the decision to leave the status quo intact helped fuel a Yen rally. Attentions today turn to a relatively quiet economic docket with FOMC member Dudley and ECB President Mario Draghi hitting the wires. Markets will be closely tuned to any indication or promise of policy action before years end.
Data releases:
AUD: No Data
NZD: Credit Card Spending y/y
JPY: BoJ Monthly Report
GBP: Public Sector Net Borrowing
EUR: German PPI m/m, EMU Consumer Confidence, ECB President Draghi Speaks and Berman Buba President Weidmann Speaks
USD: FOMC Member Dudley Speaks