Australian Dollar:
The Australian dollar offered little through trade on Friday struggling to break outside a relatively tight trading band. The Thanksgiving weekend ensured thin volumes and limited price action as investors pare positions and prepare for a critical week ahead. Having held onto recent gains around 0.7200 the AUD looks set to test support levels at 0.7184 and 0.7128 in a week packed with Central bank policy announcements and crucial macroeconomic data sets. The RBA will set the tone Tuesday with the majority of investors anticipating the board will maintain the status quo and leave the current benchmark cash rate unchanged ahead of an ECB policy announcement and U.S non-farm payroll numbers. A strong labour market print on Friday will all but secure a Fed IR increase and drive greenback strength into years end. We anticipate a tight trading range through Monday with top side resistance on approaches to 0.7250.
We expect a range today of 0.7120 – 0.7250
New Zealand Dollar:
The NZD gapped lower into the close on Friday breaking toward the 0.65 handle as investors begin positioning themselves ahead of a make or break week for central bank policy announcements. It seems markets are reluctant to push the Kiwi much beyond resistance at 0.658/0.66 ahead of Friday’s U.S employment data with investors are anticipating a strong print as affirmation the Federal Reserve and FOMC will raise rates when they next meet in two weeks’ time. Attentions today turn to local ANZ Business confidence report as a marker for direction into the week ahead.
We expect a range today of 0.6480 – 0.6610
Great British Pound:
The Great British Pound moved lower throughout trade on Friday edging ever closer to the psychological point of support at 1.50 as investors jumped behind the Greenback on expectations the Fed will raise rates later this month. In thin Thanksgiving weekend trade Sterling succumb to selling pressure as markets looked to the world’s base currency following increasing speculation the Swiss National Bank and ECB will deepen cuts to deposit rates highlighting the divergence between European and U.S central bank monetary policies. With little of note on the domestic calendar today attentions remain squarely focussed Friday’s Non-Farm payroll print as a marker for medium term direction.
We expect a range today of 2.0750 – 2.1050
Majors:
The Euro moved through 8 month lows on Friday breaking and closing below 1.06 as investors position themselves ahead a make or break week for central bank policy expectations. The 19 nation shared unit came under continued pressure as analysts and investors prepare for an expansion in the ECB’s quantitative easing program. ECB officials are set to deliver a policy update on Thursday wherein it is widely expected they will announce further cuts to deposit rates and an increase in the monthly bond buying package. The Greenback moved to 5 year highs against the Swiss Franc and 8 month highs against a basket of currencies as analysts look to Friday’s non-farm payroll print for further evidence of recovery and a marker to cement a Fed policy update later this month. Most investors expect the FOMC will raise rates when it meets in 2 weeks’ time strengthening demand for USD longs and bullish bets. The divergence in monetary policy saw the CHF tumbled on suggestions the Swiss National Bank will cut its already negative deposit rates further in a bid to combat ECB policy moves and protect the CHF and Swiss trade. Attentions today turn to mid-level housing data and German domestic retail sales for direction through Monday with trader’s primary focus directed toward Thursday’s ECB policy statement and Friday’s Labour Market data as the chief markers of long term direction.
Data releases:
AUD: MI Inflation Gauge, HIA New Home Sales, Company Operating Profits and Private Sector Credit.
NZD: Building Consents and ANZ Business Confidence
JPY: Retail Sales, Prelim Industrial Production and Housing Starts
GBP: Net Lending to Individuals, M4 Money Supply and Mortgage Approvals
EUR: German Retail Sales, German Prelim CPI and Italian Prelim CPI
USD: Chicago PMI and Pending Home Sales