Australian Dollar
Expected Range 0.7320 – 0.7420
The Australian dollar held up above the 73 US cents handle yesterday after a solid Consumer Price Index read from its largest trading partner provided support. Whilst battling broadly weaker commodity prices and a stronger Greenback China’s inflation read of 2.3 percent for the month of April came in on expectation. In a sign of stability the Producer Price Index also did not shrink as much as expected. Proving to be a relatively quiet 24 hour window the Australian dollar ran out of steam at a rate of 0.7379 when valued against its US Counterpart overnight. Opening weaker this morning the Australian dollar currently buys 73.67 US Cents.
New Zealand Dollar
Expected Range 0.6720 – 0.6920
The New Zealand dollar struggled to break outside a tight 40 point trading band Tuesday bouncing between intraday lows at 0.6720 and session highs at 0.6760. The Kiwi failed to take advantage of renewed and widespread appetite for risk as investors positioned themselves ahead of key RBNZ policy announcements. The Reserve Banks Financial Stability Report and comments from Central Bank Governor Wheeler are the big ticket items driving direction through the week and analysts will be keenly attuned to comments and rhetoric as markers for future monetary policy. Early analysis of the central banks financial stability report has prompted a rally through 0.68. The board noted it will closely monitor developments locally and globally to assess whether further monetary policy amendments are appropriate. The comments appear to affirm the central banks shift toward a neutral policy stance with scope for a move back to a more accommodative platform should conditions deteriorate.
Great British Pound
Expected Range 1.9200 – 1.9600
The Great British Pound touched four month highs through trade on Tuesday breaching 1.4750 to tap 1.4775. Continued USD weakness has prompted a Cable recovery across the 4 months since the unit touched 7 year lows of 1.3860 in late February. Gains were however short lived and investors looked to short the Pound following opinion polls that suggested Britons would elect to leave the European Union. Recent gains have been capped by political pressures surrounding a possible Brexit. With attentions turning to domestic construction numbers for direction through Wednesday investors will be keenly focused on support and resistance points above 1.47 and below 1.45.
Majors
Expected Range N/A
The Greenbacks collapse continued through trade on Tuesday touching 18 month lows against the Yen and 10 month lows against the Euro. Speculation the Bank of Japan will intervene to deflate the currency are undermining attempts to reinvigorate the economy and heightening concerns surrounding stagnant global growth. The USD touched intraday lows at 105.52 marking a 12% depreciation through 2016 thus far. Investors are being drawn toward the safety of lower yielding, liquid currencies as commodity markets remain under pressure and monetary policy globally remains highly accommodative. Comments from San Francisco Fed President John Williams where in the FOMC board member backed a June rate hike failed to garner any real momentum but at least managed to arrest the depreciation. Bouncing of intraday lows the world’s base currency moved marginally higher edging back through 106.50 while the Euro slipped back below 1.16. Attentions now turn to Preliminary Non-Farm payroll numbers and European Services data for direction through Wednesday. Investors will be keenly attuned to any data set that indicates an uptick in U.S employment and wage growth is on the cards as they position themselves ahead of Fridays wage growth report and Non-Farm payroll print, a poor read would all but eliminate the prospects of a June rate hike and likely induce another bout of USD shorting.