Australian Dollar
Expected Range 0.6980 – 0.7180
The Australian dollar rallied through 0.71 touching 3 week highs at 0.7128 overnight after oil prices bounced higher and U.S macroeconomic data fell considerably short of market estimates. Crude Oil prices jumped 2.5% after OPEC and Russia moved nearer an agreement to reduce production and limit the flood currently saturating the market. The rally helped bolster confidence in commodity paired currencies with the upward move cemented on softer U.S core durable goods orders. Durable goods orders fell some 5.1% well beyond market expectations and highlights/supports the view the U.S recovery is slowing in the face of stagnant global demand. The poor print comes on the back of a dovish Fed rate statement and only increases the likelihood monetary policy will remain accommodative through March and the first half of 2016. Having struggled to hold onto gains above 0.70 through January thus far the recent re-position in Fed interest rate expectations could help the AUD maintain a sustained period of stability should Chinese growth concerns abate and global volatility ease.
New Zealand Dollar
Expected Range 0.6420 – 0.6620
The New Zealand dollar recouped much of the losses suffered in the wake of Thursday’s RBNZ rate statement and policy announcement bouncing higher through overnight trade touching session highs at 0.6513. The Kiwi followed a rally across commodity currencies as crude oil jumped 2.5% and soft U.S macroeconomic data extended the timeline of expectations surrounding secondary US interest rate increases. With little of note on the domestic docket the Kiwi will look offshore as a raft of U.S, European and Japanese data sets drive direction into the weekend.
Great British Pound
Expected Range 2.0150 – 2.0450
The Great British Pound rallied strongly through trade on Thursday bouncing through 1.4350 to touch intraday highs at 1.4406. Preliminary GDP estimates met market expectations writing in a half percent expansion through the 4th quarter of 2015. The stable print lead a rally on relief growth had not slowed and the Sterling jumped against its U.S counterpart cementing gains on softer U.S Core Durable Goods Orders. The extension of secondary U.S rate increase expectations brings monetary policy projections closer however the Fed holds onto an overriding hawkish bias and we anticipate a continued bearish GBP/USD outlook through the first quarter. Attentions turn to U.S prelim GDP estimates as the headline ticket on the docket through Friday.
Majors
Expected Range N/A
The U.S dollar tumbled against the Euro and its commodity dependent counterparts through trade on Thursday following a dismally soft Core Durable Goods Orders. Falling 1.2% Core Durable Goods Orders followed a 5.1% plunge in Durable Goods Orders surprising markets and extending the timeline of expectation surrounding the pace of secondary Fed interest rate adjustments. The poor print followed Wednesday’s somewhat, albeit largely expected, dovish FOMC rate statement and almost certainly closes the door on a March rate amendment. The possibility of an extended period of stable interest rates saw investors chasing a higher yield fuelling rallies across the AUD, NZD, CAD and ZAR. The rout and run to higher yielding assets in risk on trading saw the Yen follow the Greenback lower relinquishing gains against 15 of it 16 primary currency counterparts ahead of today’s BoJ Monthly policy meeting and statement. While many anticipate the BoJ will maintain the status quo there remains whisperings the Central Bank will increase the size and pace of its current stimulus package. Attentions today turn to a heavily laden economic docket headlined by prelim fourth quarter U.S GDP, Eurozone CPI flash estimates and the BoJ monthly policy meeting.