Australian Dollar:
The Australian dollar rallied through trade on Monday, marking a two day advance as markets wound back expectations of a Federal Reserve rate adjustment. Commodity driven and Emerging Market currencies benefited from easing global and Chinese growth concerns and speculation the world’s largest Central Bank will abstain from amending its current policy stance. Moving through 0.71 U.S cents for the first time in 2 weeks the AUD touched intraday highs of 0.7153 before resistance selling took hold and forced the unit marginally lower. The fortunes of the AUD lie heavily on U.S interest rate expectations and focus this week will be squarely on the Fed for an outline on forward monetary policy. Should the FOMC push back policy changes into 2016 then a short term AUD run higher is possible as investors pare USD long positions. Attentions today turn to the RBA meeting minutes for direction through domestic trade.
We expect a range today of 0.6980 – 0.7180
New Zealand Dollar:
The New Zealand Dollar offered little through trade on Monday and opens this morning relatively unchanged buying 0.6327 U.S cents. The kiwi bounced about within a 45 point range throughout both domestic and overnight trading sessions having seemingly founds short term support on approaches to 0.63. With little of note on the domestic economic calendar Tuesday we expect investors to continue the sideways trading pattern into Thursday’s quarterly GDP numbers and the all-important Fed rate decision.
We expect a range today of 0.6280 – 0.6380
Great British Pound:
Sterling offered little through trade on Monday edging marginally lower as investors positions themselves ahead of this weeks all important Fed policy meeting. Cable advances have been capped by diverging policy expectations and despite speculation the Fed sill maintain the status quo and leave rates unchanged the door is still open for a policy amendment. In contrast the BoE is expected to maintain its own accommodative policy through the first and likely second quarters of 2016. Attentions today turn to annual CPI comparison for guidance with an increase in price pressures enhancing bids for an earlier than anticipated monetary policy change.
We expect a range today of 2.1350 – 2.1850
Majors:
The U.S dollar weakened through trade on Monday as investors expect the Federal Reserve will hold back on amending its current policy stance. While the Federal Open Market Committee is tipped to leave interest rates unchanged near zero percent when it convenes on September 16 and 17 more than 50% of analysts are pricing in a rate adjustment before years end. This speculation ensures the accompanying rate commentary and press conference will draw the attention of markets as traders seek insight and forward guidance. Volatility has plagued currency markets since the Peoples Bank of China Devalued the Yuan on August 8th and while domestic indicators fail to promote unified strength across the world’s largest economy it is expected the Fed will abstain from action. Whether this means a rate change before years end remains to be seen but this week’s speculation and downward re-positioning has opened the door for emerging market and commodity based currency to recoup some of the losses suffered over the last 6 weeks. With retail sales dominating the macroeconomic calendar and the BoJ press conference and policy statement stealing the central bank spotlight we anticipate volumes and direction will be thin and ranges will likely lack conviction leading into the weeks all important data event – the Fed meeting.
Data releases:
AUD: Monetary Policy Meeting Minutes and New Motor Vehicle Sales m/m
NZD: No Data
JPY: Monetary Policy Statement and BoJ Press Conference
GBP: CPI y/y, PPI Input m/m, RPI y/y, Core CPI y/y, HPI y/y, PPI Output m/m and CB Leading Index.
EUR: German ZEW Economic Sentiment, European Monetary Union ZEW Economic Sentiment, Employment Change q/q and Trade Balance
USD: Core Retail Sales and Retail Sales, Empire State Manufacturing Index, Capacity Utilisation Rate, Industrial Production and Business Inventories.