Australian Dollar
Expected Range 0.7450 – 0.7695
The Australian Dollar Edged lower throughout trade on Friday moving back below 0.76 to close marginally above technical supports at 0.7596. The Aussie failed to capitalise on widespread USD selling with investors reluctant to prompt any marked upward rallies ahead of Tuesday’s all important RBA policy announcement. The AUD plunged midweek following a softer than anticipated quarterly inflation print. The poor read prompted speculation the RBA would be forced to amend its neutral policy stance and cut rates to promote price stability and bolster growth. With the market divided in its expectations for a policy shift tomorrow cash rate decision promises to incite volatility. Attentions today turn to NAB business confidence and US manufacturing numbers for direction with little in the way of support for the Aussie should it dip below 0.7550.
New Zealand Dollar
Expected Range 0.6905 – 0.7080
The New Zealand dollar crept upward into the close Friday having touched intraday highs at 0.6992. Riding on the back of Thursdays RBNZ decision to leave the OCR unchanged the Kiwi capitalised on widespread USD selling and shorting as investors extended the timeline of expectation surrounding an FOMC rate amendment. With little of note on the domestic docket through Monday the Kiwi will take its cues from offshore stimuli with US manufacturing data headlining an otherwise quiet docket.
Great British Pound
Expected Range 1.9080 – 1.9480
The Great British Pound reached twelve week highs against the USD on Friday touching 1.4665 as investors continue to sell down USD net positions. Sterling capped its best weekly performance since early March as speculation Britons will opt to remain in the European Union drove direction. Increasing expectations that an exit from the EU is diminishing is yet to be backed by hard polling evidence or data and the risk to the GBP lies in a shift in polling numbers. A move toward an exit would bely the current market confidence and force a reversal back toward 1.40. With most enjoying an extended Bank Holiday weekend attentions turn to Wednesday’s construction and Thursdays service PMI for domestic macroeconomic direction.
Majors
Expected Range N/A
The Greenback edged lower into the close on Friday as investors drove net short positions to their largest levels since February 2013. Core Personal Consumption Expenditure, the Federal Reserve’s preferred measure of inflation, moved lower through March and solidified expectations the FOMC will take its time adjusting its current monetary policy stance. Speculators continue to short the USD winding out of positions invested through the back half of 2015. The Greenback advanced near 9% through the end of 2015 on expectations the Federal Reserve would adopt a reasonably aggressive path of monetary policy tightening. The shift in global growth conditions and the risks posed to the US recovery have heightened policy maker’s risk aversion waylaying at least 2 possible rate amendments. The shift in policy has forced investors to wind out of long positions and prompted a near 6% depreciation in the USD through the last 3 months. The Euro touched new 2016 highs at 1.1455 while the greenback plunged to 106.34 versus the Yen. Attentions now turn to key domestic manufacturing numbers ahead of Friday’s all important Non-farm payroll and average Hourly earnings reports as the key markers for direction through the week.