Australian Dollar:
The Australian dollar offered little to excite or entice investor action Thursday maintaining a tight trading band and bouncing between intraday lows of 0.7125 and session highs of 0.7169. Reserve Bank Governor Glenn Stevens adopted a neutral tone failing to promote any clear monetary policy path as he addressed the Banks economic and social outlook at a conference in Melbourne. Investors seemed content to sit on the sidelines; reluctant to push the Aussie outside recent ranges ahead of todays all important monetary policy statement and U.S labour market data. Analyst anticipate the RBA will maintain its current growth forecast while lowering inflationary expectations from 2.5% to 2-2.25%. This signals a dip towards the lower end of the RBA’s target band and will ensure an extension in dovish pressures.
We expect a range today of 0.7030 – 0.7230
New Zealand Dollar:
Despite a relatively quiet domestic session wherein the New Zealand dollar struggled to break outside a 25 point range the Kiwi manage to recoup some of the week’s earlier losses bouncing higher on softer than expected US employment data. A larger than expected increase in US unemployment claims helped the Kiwi arrest its fall and bounce off support at 0.6580 to touch session highs at 0.6641. With little domestic data on hand the Kiwi remains vulnerable to a deeper downward correction as investor attentions turn to US Non-Farm payroll change and key labour market data for direction through Friday.
We expect a range today of 0.6500 – 0.6700
Great British Pound:
The Great British Pound fell across the board on Thursday after the Bank of England left rates unchanged while pushing out expectations for a policy shift. Having trimmed growth and inflation forecasts Investors reacted to comments from BoE Governor Mark Carney wherein he suggested the UK would need to maintain record-low interest rates into the foreseeable future as China continues to drag on world economic growth forecasts. Cable fell more than 1% breaking through 1.53 and 1.5250 and opens this morning buying just 1.5216. The comments and rhetoric proffered by the BoE highlight the increasing gap in policy expectations and a strong Non-Farm Payroll print this evening could leave Sterling open to a deeper downward correction and move toward 1.50.
We expect a range today of 2.0950 – 2.1550
Majors:
Investors dragged the USD higher through trade on Thursday underpinning recent gains following comments from Fed Chair Janet Yellen and other key officials. Despite a larger than expected increase in unemployment claims the world’s base currency touched two month highs against the Japanese Yen while the dollar index, a measure of USD performance against a basket of currencies, reached a three month peak. New York Fed President William Dudley reinforced Yellen’s position commenting “I completely agree, December is a live possibility”. Central bank commentary and monetary policy expectations remain the driving force behind direction at present as attentions turn to Friday’s all important Non-Farm payroll numbers. Investors will be keenly attuned to increases in average hourly earnings and a strong employment change print as markers for a robust labour market and base for future inflationary pressure.
Data releases:
AUD: AIG Construction Index, RBA Monetary Policy Statement and RBA Assistant Governor Edey Speaks
NZD: No Data
JPY: Leading Indicators
GBP: Manufacturing Production, Trade Balance and Industrial Production
EUR: German Industrial Production, French Gov Budget Balance and French Trade Balance
USD: Average Hourly Earnings, Unemployment Rate, Non-Farm Employment Change, NIESR GDP Estimate and FOMC Member Brainard Speaks