Australian Dollar:
The Australian dollar has once again struggled during the early parts of this week, after a slump in Chinese equities weighed heavily on the growth linked currency. Stunning investors with an 8.5 percent drop overnight, its biggest one-day loss in eight years, concerns over growth and ultimately stability having once again risen to the surface, the rout big enough to trigger substantial losses in both the United States and Europe. Weighing on the Aussie which opens virtually unchanged this morning at a rate of 0.7270, domestic developments are few and far between this week ahead of the FOMC statement on Wednesday
We expect a range today of 0.7230 – 0.7310
New Zealand Dollar:
The New Zealand dollar opens stronger when valued against its US Counterpart this morning as it currently buys 66.02 US Cents. Despite the Shanghai Composite Index which lost a staggering 8 percent overnight, the Kiwi has remained relatively well insulated, particularly compared to the losses notched up by its trans-transman rival. Rising to a six week high when valued against the Aussie traders await a speech tomorrow by RBNZ Governor Graeme Wheeler detailing his economic outlook.
We expect a range today of 0.6560 – 0.6640
Great British Pound:
The FTSE 100 fell as much as 1.2 percent in afternoon trade yesterday, with oil and global commodity prices both also resuming their downward spiral. Whilst gold prices did rebound, the Great British Pound has done well to absorb the offshore shocks, gaining around 40 basis when points when valued against its US Counterpart. In the lead up to this evenings preliminary GDP print, growth indicators in the short-term remain set to ignite a further interest rate debate. Stronger against the Australian dollar at 2.1392 the Sterling is weaker against the New Zealand dollar (2.3555).
We expect a range today of 2.1340 – 2.1450
Majors:
The Dollar Index fell by 0.8 percent overnight, with broader risk flows favouring a shift into both the Euro and Yen which are stronger by comparison. Whilst US Treasury yields continue to rise ahead of the US Federal Reserve’s policy meeting later this week, investors will remain highly sensitive to any rhetoric which suggests rate rises may be pushed back beyond September. Despite an evening dominated by China’s stock market rout there were some signs of optimism after the Euro passed through the 1.11 mark when valued against its US Counterpart for the first time in two weeks. With demand being bolstered by a positive business sentiment read in Germany, finally there is a sense markets have moved beyond risk flows associated with Greece advancing towards a more fundamental focus surrounding broader monetary settings.
Data releases
AUD: No data today
NZD: No data today
JPY: Retail Sales y/y
GBP: GfK German Consumer Climate
EUR: No data today
USD: Pending Home Sales m/m, FOMC Statement, Federal Funds Rate
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