The Australian Dollar continued its downward spiral through trade on Monday touching intraday lows of 0.7684. Compounding the impact of Fridays strong US job’s data are expectations Chinese growth prospects will soften as Beijing set growth targets at 7%, their lowest level in 15 years. Speculators then looked to take profit fuelling a mini recovery as the AUD reached 0.7740 in early European trade before edging lower into the close. We open today buying 0.7707 US cents. Attentions now turn to the monthly NAB business confidence report and Chinese CPI data for direction through Tuesday as investors look for a catalyst or spark to push the AUD outside recent ranges.
We expect a range today of 0.7620 – 0.7850
New Zealand Dollar:
The New Zealand Dollar consolidated somewhat throughout Monday maintaining a 60 point trading range. Having fallen below support at 0.7450 the Kiwi looked skittish ahead of Thursday’s RBNZ policy meeting failing to mount any meaningful rallies despite profit taking on Greenback gains. Bearish comments from Prime Minister John Key put pause to any upward advance hinting that the RBNZ will have to employ prudential tools in managing the flourishing property market. With little macroeconomic indicators at hand to steer direction the NZD will likely remain subdued into Thursday’s rate announcement.
We expect a range today of 0.7250 – 0.7450
Great British Pound:
The Great British Pound found support Monday in the absence of headline macroeconomic indicators as profit takers lead the Greenback lower. Cable recouped some of last week’s losses moving through 1.51 to touch a daily high of 1.5136 a full cent up on the weekly open of 1.5033. In the absence of key data direction Tuesday will come from Bank of England Governor Mark Carney as he addresses the Lords Economic Affairs Committee in London. Anything short of a definitive guide on Monetary Policy will likely have little impact and we expect Sterling will maintain ranges into Wednesday’s Manufacturing Production report.
We expect a range today of 1.9450 – 1.9850
The U.S Dollars upward trajectory slowed through trade on Monday as the world’s base currency edged lower against a basket of major counterparts. Friday’s strong job’s data reinforced calls for a Federal Reserve interest rate adjustment and saw the Greenback test new 11 year highs before profit taking took hold. The Euro recouped some of Friday’s losses edging back above 1.09 to touch an intraday high of 1.0906 before the introduction of the ECB’s QE program and commencement of bond purchases forced the shared unit downward. The Euro will likely struggle to mount any meaningful rallies in the short term as the QE program is rolled out widening the gap between US and European yields and pushing investors into USD denominated assets. With little headline macroeconomic data available to guide fundamental analysts we look to Euro Ministers and talks between Greece and its creditors in governing Euro direction while a strong JOLTS job openings print will add further support to the burgeoning US labour market and buttress further Greenback gains.
AUD: NAB Business Confidence
NZD: No Data
JPY: Prelim Machine Tool Orders y/y
GBP: BoE Governor Carney and MPC Member McCafferty Speak
EUR: French and Italian Industrial Production m/m and ECOFIN Meetings
USD: NFIB Small Business Index, JOLTS Job Openings and Wholesale Inventories m/m