Australian Dollar:
The Australian dollar commences trade higher this morning at AUD/USD 0.7744 after pessimistic comments made by the RBA Governor Stevens during the day were countered by Greenback weakness later in the trade session. Mr Stevens comments that suggested the Reserve Bank is still open to further easing by way of a rate cut sent the AUD/USD to intraday lows of 0.7633, however upbeat remarks from the Bank of Japan Governor Kuroda forecasting a stronger Yen moving forward sent the US dollar down, leading to the AUD/USD relief rally shortly after. This news lead to the Aussie regaining previous losses and moving towards overnight highs of 0.7785. Trader attention today will focus on local employment figures and Chinese industrial production data.
We expect a range today of AUD/USD 0.7700 – 0.7780
New Zealand Dollar:
The NZ Dollar edged higher throughout trade yesterday due to US dollar weakness, however this morning has plunged dramatically due to an unexpected rate cut form the RBNZ. The official cash rate was cut from 3.5% to 3.25%, and with the general consensus believing rates would be kept on hold the NZD/USD dropped almost 2 cents immediately after the announcement. The Reserve Bank also hinted that there may be more cuts to come as poor figures form the dairy sector weigh down on inflation targets. With no further local data being released today the Kiwi will look overseas for any direction over the remainder of the trade session.
We expect a range today of NZD/USD 0.7040 – 0.7120
Great British Pound:
Positive economic data from the UK combined with US Dollar weakness overnight has resulted in the Pound Sterling opening higher across the board this morning. Local manufacturing data did come in slightly below forecast however a report from NIESR outlined local economic growth ramping up in the three months leading up to May. Furthermore April industrial output numbers printed much stronger than expected due to an increase in oil and gas production. The Cable starts trade today at 1.5520, and also commences at 2.0042 and 2.1957 against its Australian and New Zealand counterparts respectively.
We expect a range today of GBP/AUD 2.0010 – 2.0090
Majors:
The EUR has found further support overnight as speculation that Greek officials and creditors may be approaching a settlement is priced into the market. German Chancellor Merkel is reportedly prepared to unlock aid for the debt stricken Greece in return for only one reform from creditor’s requests to be met as a start. The EUR/USD traded sideways for the majority of yesterday’s session and has opened higher today at 1.1320. In the United States May retail sales data and unemployment claims for the past week will look to have a significant impact on the Greenback. With these sales numbers expected to increase from the previous month, and unemployment claims not expected to change substantially, if reports are released in line with these forecasts the Greenback may possibly recover previous day’s losses due to comments made by BOJ Governor Kuroda.
Data releases:
AUD: MI Inflation Expectations, Employment Change, Unemployment Rate
CAD: NHPI m/m, Capacity Utilization Rate, BOC Financial System Review, BOC Gov Poloz Speaks
CNY: Industrial Production y/y, Fixed Asset Investment ytd/y, Retails Sales y/y
EUR: French Final Non-Farm Payrolls q/q, French CPI m/m
GBP: RICS House Price Balance, 30-y Bond Auction
JPY: BSI Manufacturing Index
NZD: Official Cash Rate, RBNZ Statement, RBNZ Monetary Policy Statement, RBNZ Press Conference
USD: Core Retails Sales m/m, Retails Sales m/m, Unemployment Claims, Import Prices m/m, Business Inventories m/m, Natural Gas Storage, 30-y Bond Auction