Australian Dollar:
The Australian dollar has fallen by more than one US Cent over the past 24 hours following news that China had devalued its currency. By adjusting the USD/CNY exchange rate by 1.9 percent, the largest ever shift on record, this move is seen by many as the first step towards having a daily fixing rate which is more closely aligned to the market spot rate. Falling from opening levels above the 74 US Cents mark the Aussie was dumped, touching a low of 0.7283 when valued against its US Counterpart. Swapping hands this morning at a rate of 0.7303 a Westpac Consumer Sentiment read along with a wage price index will be key in driving the currency during early the parts of today.
We expect a range today of 0.7260 – 0.7350
New Zealand Dollar:
Falling off the back of news that China had devalued its currency, investors have since taken the view that such moves could provide further economic headwinds for New Zealand’s economy. With a lower Yuan the price paid for New Zealand’s exports essentially becomes more expensive, a shift which could threaten broader demand. Highlighting now the important link between the path of the Yuan and the outcomes faced by many neighbouring trading partners the Kiwi has since come under substantial pressure. Opening close to a full cent lower the New Zealand dollar currently buys 65.36 US Cents.
We expect a range today of 0.6500 – 0.6580
Great British Pound:
The Great British Pound has consolidated its gains from earlier in the week overnight that is despite a session which generally favoured holding a long USD position. Hovering just below the 1.56 mark over the past 24 hours, the next fundamental release in the UK arrives this evening in the form of monthly employment data. Eying initial support at 1.5550 when valued against its US Counterpart an improved labour market result will be required if the Sterling is to receive a further boost. In other currency moves the Sterling opens stronger when valued against the Aussie (2.1317) and the Kiwi (2.3824).
We expect a range today of 2.1260 – 2.1380
Majors:
Asian and commodity backed currencies have fallen across the board over the past 24 hours triggering a notable shift back into traditional safe haven pockets. In a move which has had a profound impact on forex markets, the yuan’s depreciation comes at a time when policy makers are working overtime to support both short-term growth initiatives along with longer-term structural improvements. In the US overnight, despite a positive Preliminary Unit Labour Cost read which surpassed expectation, overall productivity barely rebounded last quarter, struggling to gain any real traction. In what’s set to be a key driver today Industrial production numbers from China are likely to enhance the spotlight with China’s growth story finally getting the airtime it warrants. Opening weaker against the Yen this morning at a rate 124.622, periods of heightened uncertainty are likely to be a USD positive.
Data releases
AUD: Westpac Consumer Sentiment, Wage Price Index q/q
NZD: No data today
JPY: Monetary Policy Meeting Minutes
GBP: Average Earnings Index 3m/y, Unemployment Rate
EUR: No data today
USD: FOMC Member Dudley Speaks, JOTLS Job Openings
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