Australian Dollar:
The Australian dollar crept higher through trade on Friday bolstered by softer than anticipated U.S consumer sentiment and domestic factory activity. Having pulled back from Wednesday and Thursdays highs beyond 0.8150 the Aussie held onto gains above the psychological 0.80 handle as investors looked to the higher yielding asset and pushed out the timeline of expectation framing a Federal Reserve rate adjustment. The AUD has been one of the top performers in quarter two thus far and appears to have enter a higher trading bracket with analyst’s now anticipating the commodity based unit will hold above 0.78 into and through the middle of the year. Attentions now turn to Tuesday’s Reserve Bank minutes for further policy guidance ahead of a crowded week ahead.
We expect a range today of 0.7930 – 0.8150
New Zealand Dollar:
Having relinquished some of the week’s early gains on Thursday the New Zealand dollar failed to rally back through the 0.75 cent handle Friday despite softer than anticipated U.S consumer sentiment and domestic factory activity. The Kiwi still remains an attractive yield option but as the RBNZ moves toward a dovish policy outlook upside resistance looks set to kick in on advances through 0.7550. With little of note garnishing the domestic docket today we look to quarterly inflation expectations tomorrow for further guidance and direction.
We expect a range today of 0.7380 – 0.7550
Great British Pound:
The Great British Pound closed the week having maintained gains earned on the back of the Conservative election romp. Rallying nearly four percent into Friday Sterling touched its highest level in 2015 before markets pared the advance and attentions shifted back toward the British economic outlook. Focus now turns to Bank of England minutes and policy guidance into the back half of the year. With inflationary prospects muted and growth sluggish there is room for a downward adjustment back toward 1.55 should U.S growth prospects cooperate.
We expect a range today of 1.9350 – 1.9750
Majors:
Softer than anticipated macroeconomic data forced the U.S dollar lower Friday marking a fifth consecutive weekly decline for the dollar index. Consumer sentiment and domestic factory activity both fell short of analysts’ expectations, highlighting concerns surrounding 2nd quarter growth and U.S economic stoutness. The timeline that frames U.S monetary policy continues to widen as investors net out long positions and markets look toward September and possibly 2016 as the points for a potential Federal Reserve policy and rate adjustment. Attentions now turn to the week ahead and a crowded economic docket. The Australian Reserve Bank, Bank of England and Federal Open Market Committee all release their latest minutes while European Manufacturing numbers headline the calendar into this weekly close. Investor’s will be keenly focused on the FOMC for any forward policy guidance and a stimulant to end the bearish USD run.
Data releases:
AUD: RBA Deputy Governor Lowe Speaks and New Motor Vehicle Sales m/m
NZD: No Data
JPY: Core Machinery Orders m/m, Revised Industrial Production m/m and Tertiary Industry Activity m/m
GBP: Rightmove HPI m/m
EUR: Italian Trade Balance and German Buba Monthly Report
USD: NAHB Housing Market Index