Australian Dollar:
The Australian Dollar was forced lower through trade on Friday as broad based USD gains sent the currency below 0.73. Soft CPI data coming out of Europe combined with better than expected consumer sentiment data saw the USD strengthen against most major currencies amid diverging monetary policy expectations. With no data out locally the market will look toward a raft of macroeconomic data sets due out of China including GDP y/y and Industrial Production y/y for direction through trade on Monday. Upbeat data should give the AUD support and arrest the slide into the new trading week.
We expect a range today of AUD/USD 0.7180 and 0.7350
New Zealand Dollar:
The New Zealand dollar offered little through trade on Friday bouncing within a 20 point range either side of 0.68 U.S Cents as an upbeat CPI report helped shield the Kiwi from broad based Greenback gains. Quarterly CPI data showed price pressures increased beyond market expectations reducing speculation of broad based rate cuts and supporting recent commentary from RBNZ Governor Wheeler wherein the Central Bank head suggested long term rate cuts may not be employed to stimulate growth. We open this morning buying 0.6790 U.S cents as attentions turn offshore to a raft a critical Chinese data sets for direction through trade on Monday.
We expect a range today of 0.6680 – 0.6880
Great British Pound:
The Great British Pound held onto gains enjoyed earlier in the week bouncing between 1.5435 and 1.5480 through trade on Friday. With little domestic data on hand Sterling took queues from offshore stimuli and as investors looked to diverging European and U.S monetary policies Cable positions were largely ignored into the weekly close. As the gap between Federal Reserve and Bank of England policy adjustments closes there is scope for further GBP strength moving into the end of 2015.
We expect a range today of 2.1080 – 2.1480
Majors:
The U.S Dollar rose against a broad basket of currencies on Friday advancing for a 2nd consecutive day and eating into 7 week lows. Buoyed by a stronger than anticipated inflation report Thursday the Greenback advance continued into the weekly close as investors compared the upbeat data set with weakening Eurozone inflationary numbers and an expectation the ECB will be forced to increase or at the very least extend its current bond buying program. Eurozone price pressures eased year on year while core CPI remained unchanged forcing the 19 nation combined unit below 1.1350. Upbeat consumer sentiment was largely brushed aside as the USD rally was curtailed by softer than expected industrial output and job openings reports pushing speculators to reduce long bets with bullish forecasts and net long positions falling to their lowest level in more than 12 months. Monetary policy continues to drive currency direction at present and despite expectations for a Fed rate adjustment running into 2016 the U.S economic outlook is still relatively upbeat when compared with major currency counterparts. Attentions now turn to key Chinese GDP and Industrial Production numbers for direction in an otherwise quiet Monday session.
Data releases:
AUD: No Data
NZD: No Data
JPY: No Data
GBP: Rightmove HPI m/m
EUR: German Buba Monthly Report
USD: FOMC Members Brainard and Lacker Speak and NAHB Housing Market Index