Australian Dollar:
The Australian dollar opens this morning in a familiar position when valued against its US Counterpart at a rate of 0.7750. Despite global concerns which surround a possible Greek exit the Australian dollar has been generally well supported over the past 24 hours after minutes from the Reserve Banks May meeting failed to provide any further clues towards additional monetary easing. Whilst the RBA did repeat its plea for a lower currency it was the absence of an explicit easing bias which has been broadly AUD supportive. In what’s shaping up as a quiet session intraday, trading ranges have already started to condense ahead of this evening highly anticipated US Federal Reserve meeting.
We expect a range today of 0.7700 – 0.7800
New Zealand Dollar:
The New Zealand dollar has treaded water when valued against its US Counterpart over the past 24 hours, drifting between a low of 0.6972 and a high of 0.7009. Whilst US indicators were supportive of Greenback strength, the New Zealand dollar has also done well to maintain levels close to the 70 US Cents mark in the context of a broadly risk adverse global backdrop as well as falling dairy prices which slipped again during a global dairy trade auction this morning. Opening virtually unchanged buying 69.86 US Cents, current account numbers locally followed by the FOMC this evening will be the main currency drivers across the Asian and US sessions today.
We expect a range today of 0.6940 – 0.7020
Great British Pound:
For the time being Britain’s deflationary fears have been sidelined after the Consumer Price Index in May rose back above zero, showing that prices strengthened by 0.1 percent last month. Whilst still below the Bank of England’s target of 2 percent, it is expected to pick up further towards the end of the year moving towards its ultimate goal in 2016. Acknowledging it’s the first improvement in four months investors pushed the Great British Pound to an overnight high of 1.5654 when valued against its US Counterpart, opening 40 basis point stronger this morning at a rate of 1.5647. Ahead of domestic employment numbers and a US monetary policy update the Sterling opens stronger also when valued against the Australian dollar (2.0194) and the New Zealand dollar (2.2394).
We expect a range today of 2.0140 – 2.0250
Majors:
Despite the latest report overnight which showed housing starts fell 11.1 percent in May to 1.04 million annualised rate, the release still marks the best back to back result sine 2007 with a separate building permit report showing an expansion of 11.8 percent. Given the notable improvements across US housing and labour markets, investors have moved towards pricing in the first hike in US interest rates for September with the FOMC’s two day meeting, which commences this evening, closely watched for clues which surround the pace of future hikes, in line with updated forecasts. Whilst Fed signals are likely to dominate forex moves this evening, investors continue to pay close attention to Greek developments which took a turn for the worse overnight after Greek PM Alexis Tsipras accused creditors of trying to “humiliate” Greece. In what promises to be an eventful 24 hour window the US dollar opens this morning steady against the Yen at 123.40 whilst surprisingly lower against the Euro at 1.1250.
Data releases
AUD: MI Leading Index m/m
NZD: Current Account, GDT Index
JPY: Trade Balance
GBP: Average Earnings Index 3m/y, MPC Official Bank Rate Votes, Claimant Count Change
EUR: Final CPI y/y, German 10-y bond auction
USD: FOMC Statement, FOMC Economic Projections, Federal Funds Rate, FOMC Press Conference
Learn more about Michael Judge