Australian Dollar:
The Australian dollar was forced lower Wednesday as stronger than expected U.S housing data fuelled expectations the U.S economic slowdown is begging to turn. Tuesdays big ticket domestic headline, The Reserve Bank’s May Meeting Minutes, was largely shrugged aside as the boards transcript offered little guidance or scope for a future rate move. Moving through 0.7950 the Aussie touched intraday lows of 0.7906 before support kicked in leaving the AUD range bound into this morning’s open where we buy just 0.7915 U.S Cents. Attentions now turn to Deputy Governor Lowe for a deeper insight into RBA policy while offshore direction will be driven by FOMC meeting minutes.
We expect a range today of 0.7820 – 0.8080
New Zealand Dollar:
The New Zealand dollar enjoyed a mixed session rallying on the back of better than expected inflation expectations to touch session highs of 0.7444. Resistance on approaches to 0.7450 kept a lid on the advance and stronger than anticipated U.S housing data fuelled a Greenback rally forcing the Kiwi lower. The downward shift was compounded when the Global Dairy Trade Index fell a further 2.2% driving the NZD to new 1 month lows touching 0.7330. Attentions turn offshore to FOMC minutes for direction through Wednesday.
We expect a range today of 0.7290 – 0.7450
Great British Pound:
The Great British Pound lurched downward Tuesday as the post-election gloss begins to wear thin and markets look to economic performance for directional impetus. Tumbling one and a half cents when the Office of National Statistics annual inflation report suggested consumer prices fell in the 12 months since April 2014 Sterling touched intraday lows of 1.5450. While the market had widely anticipated a soft read the negative print is the first since record keeping began in 1960 and amplifies concerns of deflation. Bank of England Governor Mark Carney looked to stifle fears blaming record low oil and energy prices for the annual dip suggesting inflation would move toward the Banks 2% target into the end of the year. Attentions now turn to the BoE’s monetary policy committee meeting minutes for policy guidance and direction through Wednesday.
We expect a range today of 1.9425 – 1.9750
Majors:
The US dollar continued to recoup last week’s losses through trade on Tuesday moving higher on the back of stronger than expected housing data. April housing starts touched seven and a half year highs and wrote in well beyond analysts’ expectations adding support to a dollar index rally. The Greenback pushed through two week highs against the Euro as the 19 nation shared unit dipped nearly 2% to touch intraday lows of 1.1118. ECB board Member Benoit Coeure compounded the Euro’s decline when he confirmed the Central bank would pick up the pace of security purchases in May and June to cover seasonally low liquidity through July and August. Coeure admitted that the speed of the recent government bond sell off was concerning and the stubbornly high Euro was somewhat counteracting the ECB’s efforts to revive the economy. Attentions now turn to the Federal Reserve’s FOMC meeting minutes for guidance and direction through trade on Wednesday. The timeline of expectation surrounding an upward rate adjustment is under constant review with bets ranging from September into January 2016. Investors will be keenly attuned to any rhetoric suggesting a policy adjustment is imminent and while we expect broader Greenback strength to continue any extension beyond September could fuel short term weakness for the world’s base currency.
Data releases:
AUD: RBA Deputy Governor Lowe Speaks and Westpac Consumer Sentiment
NZD: No Data
JPY: Prelim GDP q/q and Prelim GDP Price Index y/y
GBP: MPC Official Bank Rate Vote and Asset Purchase Facility
EUR: German PPI m/m
USD: Crude Oil Inventories and FOMC Meeting Minutes