Australian Dollar:
The Australian dollar continued its downward run yesterday, breaking through fresh downside barriers as concerns over China’s ongoing share rout spread through regional markets. Moving beyond mainland China, share markets in Hong Kong, Japan, New Zealand and Australia also notched up solid losses with analysts worried about broader stability measures, as it’s likely to significantly weigh on confidence, consumption and ultimately economic growth. Having dropped to a late session low of 0.7372 when valued against its US Counterpart the Australian dollar opens this morning 25 basis points lower at a rate of 0.7426. Of critical importance today, Australia’s headline unemployment rate is expected to have deteriorated somewhat during June with a CPI print from China also being closed watched.
We expect a range today of 0.7370 – 0.7460
New Zealand Dollar:
Despite the market turmoil which has gripped China’s stock market this week, the New Zealand dollar has done well to gain in value versus the world’s reserve currency over the past 24 hours. Reaching highs of 0.6750 the Kiwi has defied broader risk barometers which still remain highly sensitive as a Greek debt deadline looms this coming Sunday. Hinting that the sell-off witnessed earlier in the week, which took the New Zealand to a fresh five low, may have gone too far the Kiwi opens on stronger footing this morning buying 67.35 US Cents.
Great British Pound:
With Eurozone negotiations with Greece as well concerns for China both lurking in the background the Great British Pound has struggled to find support over the past 24 hours. Despite a Halifax house price index which showed prices were up 3.3 percent over the past three months and 9.6 percent annualised, the Sterling dropped versus the Greenback opening this morning at a rate of 1.5361. Lower also against the Australian dollar (2.0678) and the New Zealand dollar (2.2805), the Bank of England when they meet this evening are expected to keep existing monetary settings well intact.
We expect a range today of 2.0610 – 2.0720
Majors:
US Stocks closed sharply overnight, with all major indices lower across the board, as the fallout from China’s stock market rout eclipsed Greece’s debt crisis. Whilst nearly half of China’s listed companies have halted trading in an attempt to insulate themselves from further falls, the sheer magnitude of the drop over past three weeks, highlights just how much panic exists. In other developments the race to save Greece has been given another timeline with Athens formerly applying for a three-year loan to Europe. Given until Sunday to strike a new agreement, investors for the third week in a row are being asked to keep a very close on eye markets over the weekend, in preparation for Monday’s open. Whilst the FOMC also garnished some attention overnight, maintaining groundwork for future rate hikes, global uncertainty has raised speculation that policy makers may continue to drag their heels off, taking the view offshore fragilities could weigh on domestic growth efforts. Stronger against the Greenback this morning the EUR currently swaps hands at a rate of 1.1069.
Data releases
AUD: Employment Change, Unemployment Rate
NZD: No data today
JPY: Core Machinery Orders m/m
GBP: Official Bank Rate, Asset Purchase Facility, MPC Rate Statement
EUR: No data today
USD: Unemployment Claims