RBA offers little guidance as AUD holds firm in face of softening China

Australian Dollar

Expected Range 0.7030 – 0.7280

The Australian dollar enjoyed a mixed fortunes through trade on Tuesday recouping early losses and edging higher into the daily close. Softening building approvals and weakening Chinese manufacturing conditions forced the Aussie dollar toward intraday lows at 0.7104 ahead of the RBA’s Cash Rate Announcement and accompanying Rate Statement. The AUD found support in the aftermath of the RBA’s decision to maintain a neutral policy stance as the Central Bank offered little extension on last month’s commentary. Recovering oil prices and a continued rebound in Iron Ore helped push the AUD higher bouncing to intraday highs at 0.7192. Attentions now turn to a domestic fourth quarter GDP report and U.S prelim Non-farm payroll numbers for direction through trade today.

New Zealand Dollar

Expected Range 0.6530 – 0.6730

The New Zealand dollar struggled to break outside a relatively tight trading bracket through trade on Tuesday bouncing between 0.6580 and 0.6630 for much of the day. With little domestic data on hand to drive direction the NZD edged downward in early European trade touching intraday lows at 0.6568 as stronger than anticipated US manufacturing data bolster calls for a Fed Rate hike. The NZD then rebounded, following emerging markets and commodities higher moving back through 0.66. The Kiwi opens this morning buying 0.6631 U.S cents as analysts attentions are again drawn offshore. U.S prelim non-farm payroll numbers dominate the daily docket as investors look for insights into Friday’s all important labour market report.

Great British Pound

Expected Range 1.9025 – 1.9625

The Great British Pound edged marginally higher through trade on Tuesday as positions are corrected following last week’s dramatic sell off. Brexit fears and the panic that followed political commentary last week has subsided somewhat as markets assess the path toward the June 23 referendum. Despite a deeper than expected decline in Manufacturing PMI the UK manufacturing sector is still expanding and attentions today turn to Construction PMI for direction through the domestic session. Despite the small recovery Sterling remains entrenched in a wider bearish channel and is vulnerable to deeper losses as softening monetary policy expectations and Brexit fallout govern direction through the coming months.

Majors

Expected Range N/A

The U.S dollar rebounded Tuesday, recouping losses and reversing its worst single day decline against the Yen in more than a fortnight. The Greenback found support on moves below 112.50 rallying strongly as investors looked to take profit and unwind overbought JPY positions. Better than expected Manufacturing PMI helped bolster the USD rally highlighting the strength of the U.S recovery and satisfying calls the US is running a healthier path toward a second interest rate increase. The world’s base currency moved through 114 to touch intraday highs at 114.18 while the Euro touched one month lows. Investors are quickly dumping the 19 nation shared unit ahead of the March 10 European Central Bank policy meeting, wherein it is widely expected ECB president Mario Draghi will promote new stimulus measures designed to bolster growth and inflation. The Euro fell through 1.0850 touching session lows at 1.0833 before finding support into the daily close. The Euro has suffered a dramatic reversal having plunged over 500 points since touching 5 month highs at 1.1375 just 3 weeks ago. Weaker data and softening inflation expectations have led investors to expect an audacious policy move next week. Until then attentions turn to Prelim Non-Farm employment data ahead of Friday’s headline labour market report as markers of U.S economic health.