Australian Dollar:
The Australian dollar was forced lower through trade on Wednesday despite a stable Retail Sales print and shrinking trade deficit. The AUD moved marginally higher throughout domestic trade touching intraday highs of 0.7223 before comments from Fed Chair Janet Yellen intensified bets the FOMC would raise rates in December. Yellen’s remarks in combination with upbeat U.S Macroeconomic data fuelled a Greenback rally as investors begin repositioning expectations to better align market and Fed economic outlooks. The Aussie moved through 0.7150 in overnight trade touching session lows of 0.7135 and while remains well bid above 0.70 seems to be struggling on advances beyond 0.72. Attentions today turn to RBA Governor Stevens with investors looking to decipher any interest rate clues ahead of tomorrow’s all important Monetary Policy Statement.
We expect a range today of 0.7080 – 0.7230
New Zealand Dollar:
The New Zealand dollar was forced lower Wednesday suffering a second consecutive daily decline as an increase in the unemployment rate and a softer than expected employment change report heightened expectations the RBNZ may need to cut rates next month. The unemployment rate ticked higher to 6.0% while the number of employed persons fell 0.4% in the 3 months to October. The poor labour market data compounds a 7.4% drop in dairy prices suffered Tuesday leaving the NZD vulnerable to a deeper downward correction. Having lost 2 cents through the week thus far the Kiwi breached key technical support points overnight and could move through 0.65 if Friday’s Nonfarm payroll numbers signal stronger employment growth throughout the US. Attentions today turn offshore as we open this morning buying 0.6584 U.S cents.
We expect a range today of 0.6500 – 0.6670
Great British Pound:
The Great British Pound edged lower through trade on Wednesday following comments from US Federal Reserve Chairwoman Janet Yellen. Yellen highlighted the diverging gap in monetary policy outlooks reiterating the FOMC’s stance and confirming December remains a viable date for a lift-off in interest rates. Sterling fell through 1.54 touching intraday day lows at 1.5360 as attentions turn to a raft of key BoE announcements. While investors anticipate the BoE will maintain its current policy platform the all-important inflation report will be closely scrutinised as markets look to any sign of future price pressures as a marker for a possible policy adjustment in the New Year.
We expect a range today of 2.1350 – 2.1750
Majors:
The Greenback advanced against a basket of currency through trade on Wednesday rising sharply following comments from Federal Reserve Chairwoman Janet Yellen and upbeat domestic data. Yellen reinforced the FOMC’s current outlook reiterating a December rate adjustment was still very much a possibility if incoming data continues to meet committee expectations. A stronger than anticipated expansion in the services sector and optimistic preliminary non-farm payroll numbers helped boost USD support as investors closely scrutinise macroeconomic announcement. With Labour market data and inflation indicators the primary drivers behind interest rate expectations attentions now turn to Friday’s all important Non-Farm Payroll and labour market report. Analysts are forecasting a buoyant print above 180K as markets respond to softer numbers in August and September. A strong read will go a long way and may prompt a further run on US interest rate expectations as private sector growth should hopefully translate into price pressures over the coming months. Markets look to unemployment claims Thursday as a precursor to Fridays big ticket items.
Data releases:
AUD: RBA Governor Stevens Speaks
NZD: No Data
JPY: Monetary Policy Meeting Minutes and 10 Year Bond Auction
GBP: Halifax HPI m/m, BoE Inflation Report, Official Bank Rate Announcement, MPC Official Bank Rate Votes, Monetary Policy Statement, Asset Purchase Facility and Asset Purchase Facility Votes.
EUR: ECB Economic Bulletin, Retail PMI, Spanish and French Bond Auction, EU Economic Forecast and ECB President Draghi Speaks.
USD: Unemployment Claims, Prelim Nonfarm Productivity Q/Q, Prelim Unit Labour Costs Q/Q and FOMC Members Fischer and Lockhart Speak.