Australian Dollar:
The Australian dollar moved a full cent lower through trade on Wednesday on the back of softer Chinese growth prospects and ever increasing bets the U.S dollar will continue to strengthen on the back of Central Bank policy amendments. The AUD plunged after a Chinese Manufacturing report proffered its worst reading in six years, amplifying concerns surrounding the global growth outlook and driving commodity prices lower. Edging back below 0.70 the gloss has certainly rubbed off last week’s rally and leaves the AUD poised for a consolidation below the 0.70 handle. With investors targeting 0.68 into years end we expect the market will defend moves below 0.6980 and 0.6950 until a clearer and definitive U.S monetary policy path is available. With little available domestically attentions turn offshore to Fed President Janet Yellen as she hits the wires to discuss inflation and monetary policy.
We expect a range today of 0.6920 – 0.7120
New Zealand Dollar:
The New Zealand dollar followed the lead set by emerging market currencies and its commodity driven counterparts edging lower against the Greenback through trade on Wednesday. The Kiwi was forced downward by a softer than anticipated Chinese manufacturing report and a downturn in commodity prices. Touching intraday lows of 0.6233 supports kicked in and we open this morning buying 0.6264 U.S cents. Attentions now turn to local trade balance numbers and commentary from Fed President Janet Yellen for direction into the end of the week.
We expect a range today of 0.6180 – 0.6380
Great British Pound:
The Great British Pound continued its trajectory lower as investors push back expectations of a BoE policy amendment. Many had expected that stronger wage growth and employment data would fuel increasing prices pressures and wider economic activity but with global growth stagnating and inflation at zero the BoE are likely to be exceedingly cautious in adjusting interest rates. With diverging monetary policy governing direction Cable fell through 1.53 touching intraday lows at 1.5219. Attentions now turn to Fed Chair Janet Yellen and a deeper insight into U.S inflation and monetary policy.
We expect a range today of 2.1450 – 2.1850
Majors:
The U.S dollar advance against emerging market and commodity driven currencies continued through trade on Wednesday after a softer than anticipated Chinese Manufacturing report heightened concerns the world’s second largest economy will struggle to meet growth targets. The Mexican Peso and Brazilian Real led emerging market and Latin American currencies lower as mounting concerns surrounding the global growth outlook and increased chatter about a Federal Reserve rate amendment drew investment flows away from riskier assets and back toward U.S dollar long bets. The shine has certainly come off last week’s run higher, highlighting the fragility in the rally and scope for a deeper downward correction moving into the end of the year. The Greenback advance extended across most major currency counterparts while the Euro enjoyed a brief relief rally. Monetary Policy divergence is the primary catalyst driving EUR/USD at present and comments from ECB president Mario Draghi surprised investors and markets yesterday. Draghi addressed the European Economic and Monetary Committee confirming the bank is ready to act but needed more time to assess global economic and financial conditions. The comments belied suggestions an increase or extension to the current QE program was imminent and helped lift the 19 nation single currency above 3 week lows. EUR/USD opens this morning at 1.1184 as attentions today turn to US Fed Chair Janet Yellen for additional Monetary Policy guidance.
Data releases:
AUD: No Data
NZD: Trade Balance
JPY: Flash Manufacturing and All Industries Activity m/m
GBP: BBA Mortgage Approvals
EUR: German IFO Business Climate, Italian Retail Sales, Targeted LTRO and Belgian Business Climate.
USD: Core Durable Goods Orders m/m, Durable Goods Orders m/m, Unemployment Claims, New Home Sales and Fed Chair Janet Yellen Speaks