Australian Dollar:
The Australian dollar held onto recent gains firming after a solid third quarter GDP print and another string of upbeat comments from RBA governor Glenn Stevens. The Aussie butted its head against technical resistance and intraday highs around 0.7334/41 following stronger than expected quarterly growth. The Australian economy expanded 0.9% in the three months to October comfortably surpassing expectations. Having moved immediately higher the strong read prompted a round of profit taking and the AUD sunk toward intraday supports at 0.7303 with wider technical support forming on moves below 0.7280. At time of writing the AUD cling to 0.73 buying 0.7302 U.S cents as attentions turn to a monthly trade balance report ahead of the all-important ECB monetary policy meeting and press conference.
We expect a range today of 0.7180 – 0.7380
New Zealand Dollar:
The New Zealand dollar edged lower through trade on Wednesday succumbing to renewed USD confidence following comments from Fed Chair Janet Yellen. The NZD moved back through 0.6650 touching intraday lows at 0.6612 after the Greenback/dollar index reached its highest level in 12 years breaching 100.50. Yellen’s comments fuelled speculation the Fed and FOMC will look to amend monetary policy platforms when they next meet in two weeks’ time suggesting the board “is looking forward to raising rates”. With little of note on the domestic docket today attentions turn to the ECB and their all-important policy announcement ahead of Friday’s non-farm payroll print and primary marker for U.S IR expectations.
We expect a range today of 0.6580 – 0.6680
Great British Pound:
The Great British Pound followed a basket of major currencies lower through trade on Wednesday as comments from Fed Chair Janet Yellen re-affirmed expectations a US Interest rate increase is nigh. Sterling came under pressure after a softer than anticipated Construction expansion edging toward the psychological 1.50 support line. Yellen’s comments then sent Cable lower still bustling through 1.4950 and touching intraday lows at 1.4893 before USD profit taking allowed a small recovery. Attentions today turn to services data ahead of the ECB’s critical and much hyped policy press conference.
We expect a range today of 2.0250 – 2.0650
Majors:
The U.S dollar recouped losses suffered through trade on Tuesday advancing against the Euro, Yen and a basket of other major currency counterparts. Speculation surrounding a US interest rate increase intensified Wednesday as Fed Chair Janet Yellen again hinted a policy amendment was nigh. Yellen re-affirmed the Committee’s commitment to financial stability suggesting the Central Bank is “looking forward to raising rates”, a move that will be considered testament to the economy’s recovery in the face of stagnant global growth. The Euro touched near eight month lows at 1.0550 before bouncing off supports and moving back through 1.06 as investors pare positions leading into todays all important ECB policy announcement. Markets have largely priced in additional stimulus measures, the questions is what will be the ECB’s weapon of choice in the war against deflation. Stubbornly high yields toward the lower end of the curve, minimal price pressures and a perhaps overvalued EURO suggest there is room for an intense round of Bond buying and a deeper reduction in already negative deposit rates. Attentions today will be almost solely directed toward ECB President Mario Draghi as stage 1 of the diverging monetary policy debate comes to the fore.
Data releases:
AUD: AIG Services Index, HIA New Home Sales and Trade Balance
NZD: No Data
JPY: No Data
GBP: Services PMI and Halifax HPI
EUR: Spanish, Italian, French, German and European Monetary Union Services PMI, Retail Sales, Spanish and French 10 Year Bond Auctions, ECB Minimum Bid Rate/Policy announcement and ECB Press Conference.
USD: Unemployment Clams, Services PMI, Fed Chari Yellen Speaks, ISM Non-Manufacturing PMI, Factory Orders, Natural Gas Storage and FOMC Member Fischer Speaks.