Australian Dollar
Expected Range 0.7610 – 0.7780
The Australian dollar maintained a relatively tight trading range throughout Thursday despite thin weekly volumes prompting exaggerated price moves. With little domestic data on hand to drive direction the AUD was at the mercy of offshore indicators and followed its antipodean compatriot higher in early trade. Touching intraday highs at 0.7724 the AUD then bounced between 0.7692 and 0.7720 for the remainder of the daily session edging lower into the close after Fed and FOMC member John Williamson hinted at a possible December rate hike. The Aussies dollars resilience in the face of looser domestic monetary policy comes as investors remain wary of amending U.S IR expectations. With the majority of analyst anticipating the Fed to maintain its accommodative monetary policy platform through 2016 the AUD remains well bid as markets chase a higher yield return. Attentions today turn to Chinese industrial Production, fixed asset investment and U.S retail sales for direction into the weekend.
New Zealand Dollar
Expected Range 0.7130 – 0.7280
The New Zealand dollar enjoyed a wild and volatile trading session through Thursday rallying strongly throughout domestic trade before an overnight sell off that saw it give up the majority of its earlier gains. The Kiwi jumped through 0.73 following the RBNZ’s decision to cut the OCR by 25 basis points. The decision had been largely anticipated with a strong contingent of investors expecting a more aggressive easing and 50 basis point reduction. Despite dovish jawboning and announcing two more rate cuts were likely through to mid-2017 analysts forced the unit higher chasing the yield return. The NZD then moved lower as investors reacted to comments from Fed member Williamson and suggestions a December rate hike was still on the cards. Profit taking saw the Kiwi move back through 0.7250 and opens this morning buying just 0.7209 U.S cents. Attentions today turn to Domestic and US retail sales for direction into the weekend.
Great British Pound
Expected Range 1.6650 – 1.6950
The Great British Pound suffered a step sell off through trade on Thursday plunging over 100 points, breaking below the psychological 1.30 handle. Sterling touched intraday lows at 1.2938 and seems set to test post Brexit lows at 1.2795. Comments from Fed officials affirmed expectations a U.S rate hike is still on the cards and highlights the ever widening gulf in monetary policy platforms. With Bank of England hinting an extended period of accommodative interest rates and increasing stimulus the outlook remains distinctly bearish as attentions today turn to mid-level macroeconomic indicators ahead of inflation and employment date next week.
Majors
Expected Range N/A
The U.S Dollar rallied through trade on Thursday following suggestions from Fed officials the door to a 2016 rate hike remains open, if only slightly. John Williamson, President of the San Francisco Federal Reserve and FOMC voting member told markets the board would still consider raising the benchmark interest rate this year. Improved labour market conditions justified a rate hike and despite softer inflation and sluggish GDP Williamson doesn’t expect a rate amendment would derail the economic recovery. The Greenback rallied through 102 JPY and forced the Euro back through 1.1150 to touch intraday lows a 1.1136. While the comments offer an insight into what might be a shifting Fed outlook they are unlikely to be enough to sway market expectations and bring forward the timing of monetary policy adjustments. At time of writing CME Groups Fed Watch tool has 80% of analyst pricing in accommodative interest rates through to December where in 43% then anticipate the Fed will raise the benchmark rate by 25 basis points. Attentions today will be keenly attuned to German and Eurozone GDP numbers while Core Retail Sales and Consumer Sentiment drive USD direction into the weekly close.