Australian Dollar:
The Australian dollars downward correction continued Monday as investors looked to further fuel the Greenbacks bullish momentum. Breaking key supports at 0.7630 the AUD was heavily sold as stronger than anticipated US manufacturing and construction spending drove bets the Federal Reserve will raise rates for the first time in a decade before the year is out. Touching intraday lows of 0.7596 the dollar opens this morning buying 0.7606 with investors eyeing year to date lows at 0.7530 as the next key level of psychological and technical support. Attentions now turn to today’s RBA rate announcement. Expectations are for the Central Bank to refrain from any further rate adjustments as inflation remains within the 2-3% target band, while Export data is improving and asset prices are continuing to rise. In the wake of the announcement markets will be keenly attuned to the accompanying statement for an outline on future policy direction.
We expect a range today of 0.7520 – 0.7720
New Zealand Dollar:
The New Zealand dollar touched fresh 5 year lows on Monday breaking downward to touch 0.7074. While support kicked in on dips below 0.71 the bank holiday meant local trade was thin and the currency struggle to mount any meaningful rally in a market free of headline domestic indicators. Stronger than anticipated U.S construction and manufacturing expenditures through April and May forced the Kiwi lower with eye turning to psychological support at 0.70.
We expect a range today of 0.7020 – 0.7180
Great British Pound:
Cable was forced lower Monday as investors continue to fuel the fire driving the latest greenback advance. Softer than anticipated manufacturing PMI and a stagnant employment read saw Sterling shed 125 points marking its 7th consecutive bearish day. Touching intraday lows of 1.5161 and breaking technical supports at 1.5190 there is certainly room for the downtrend to continue into 1.5080. Attentions now turn to Wednesdays Services PMI and Thursdays rate announcement and MPC rate statement for direction through the week ahead.
We expect a range today of 1.9850 – 2.0150
Majors:
The U.S Dollar continued its bullish advance through trade on Monday as stronger than anticipated U.S macroeconomic data fuelled bets the Fed will raise rates before years end while renewed concerns surrounding the Greek debt crisis forced investors to shorten their combined currency positons. Manufacturing and construction spending comfortably surpassed analyst expectations in April and May with construction expenditures nearing six and a half year highs. The data helped drive the USD to fresh twelve and a half year highs against the Japanese Yen touching 124.92 (highest rate since December 2002). The strong uptick in economic indicators through May have added support to calls the sluggish Q1 performance was merely an anomaly. Expectations of a Fed rate hike before the end of 2015 continue to escalate as investors position themselves for the expected uptick in foreign investment that would accompany the first upward rate adjustment in almost a decade.
The Euro remains under pressure as the renewed concerns surrounding the Greek debt crisis force investors to short euro positions. The Greek’s missed a self-imposed May 31st deadline for reaching an agreement with creditors and with the next instalment in IMF debt reparations due Friday there is an ever increasing fear the embattled nation will be forced to default.
Attentions now turn to Wednesdays ECB Press Conference and Fridays Non-Farm payroll report for direction through the week ahead.
Data releases:
AUD: Current Account, RBA Cash Rate Announcement and Rate Statement
NZD: Overseas Trade Index q/q
JPY: Monetary Base y/y, Average Cash Earnings y/y and 10 Year Bond Auction.
GBP: Construction PMI, Net Lending to Individuals m/m, M4 Money Supply m/m Mortgage Approvals and 10 Year Bond Auction.
EUR: Spanish and German Unemployment Change, CPI and Core CPI Flash Estimates y/y and PPI m/m.
USD: Factory Orders m/m, Total Vehicle Sales and Economic Optimism.