Australian Dollar:
The Australian dollar pared gains earned in the wake of Thursday stronger than anticipated employment report edging lower and touching intraday lows at 0.7101 through trade on Friday. With little domestic data on hand to drive direction the Aussie was left to offshore vices gapping lower on upbeat US consumer sentiment and commentary from key Fed Board members. Fed vice Chair Stanley Fischer bolstered expectations the FOMC will move on monetary policy before years end emphasising his belief inflation will rebound strongly in the New Year. Market monetary policy expectations have rallied significantly in the last two weeks following wildly upbeat non-farm payroll numbers with 70% of analysts now pricing in a December rate amendment. Attentions this morning turn to Paris and Geo-political concerns will likely to force investors into haven plays leaving the AUD vulnerable to a correction below 0.71. From a macroeconomic standpoint we turn to Tuesdays RBA monetary policy meeting minutes as the primary marker for direction with resistance at 0.7150 expected to hold with support kicking in at 0.7060 and 0.70.
We expect a range today of 0.7020 – 0.7160
New Zealand Dollar:
The New Zealand dollar enjoyed a relatively quiet domestic session edging lower into the weekly close following upbeat US economic indicators and commentary from key Fed officials. Touching intraday lows at 0.6509 the NZD struggled to break outside a 50 point range and remains vulnerable to haven moves this morning as investors look to unwind risk plays in aftermath of the horror in Paris at the weekend. Geo-political concerns are likely to cause some short term downside sentiment against G-10 commodity currencies. Attentions turn to retail sales today and inflation expectations Tuesday as markers for macroeconomic direction.
We expect a range today of 0.6480 – 0.6580
Great British Pound:
The Great British Pound continued its march toward 1.50 stopping just short Friday having touched intraday lows at 1.5024. With little domestic data on hand to drive direction Cable moved lower on upbeat US consumer sentiment and Fed commentary. Vice Chair Stanley Fischer hinted at increased inflationary pressures in the New Year underpinning expectations of a Fed rate hike come December 15th. The widening gap in monetary policy outlooks has forced a dramatic correction over the past 2 weeks with Sterling losing some 5 cents on the Dollar. Attentions today turn to Geo-political concerns and the unfolding terror in Paris while yearly inflation numbers Tuesday headline the domestic macroeconomic calendar.
We expect a range today of 2.1250 – 2.1550
Majors:
The U.S Dollar advance continued throughout trade on Friday after comments from Fed Policy makers fuelled expectations the Federal Open Market Committee will raise rates before the year is out. Statements from Fed vice Chair Stanley Fischer and Cleveland Fed President Loretta Mester emphasised the recent Central Bank rhetoric underpinning expectations for a rebound in inflation and hinted at short term monetary policy amendments. Despite a softer than anticipated Retail Sales print macroeconomic indicators were bolstered by upbeat consumer sentiment suggesting an overriding positive environ for consumers throughout the fourth quarter. The Euro touched intraday lows at 1.0674 in what was supposed to be a quiet day for the 19 nation combined unit before reports of the attacks across Paris began filtering through. The Euro ticked higher as investors scrambled to unwind higher yielding risk plays, bolstering haven assets and pushing the Euro back above 1.0750. Attentions this morning turn the French capital as the scale of the devastation unfolds. From an economic standpoint we look to key note speeches from Fed officials and US CPI numbers for direction through the week ahead with any surprises likely to dampen interest rate expectations and may force a Greenback correction.
Data releases:
AUD: New Motor Vehicle Sales m/m
NZD: Retail Sales q/q and Core Retails Sales q/q
JPY: Prelim GDP q/q and Prelim GDP Price Index y/y
GBP: Rightmove HPI m/m
EUR: Final CPI, Final Core CPI, ECB President Draghi Speaks and Bergman Buba Monthly Report
USD: Empire State Manufacturing Index