Australian Dollar:
Surprising a large portion of the market yesterday the Reserve Bank of Australia kept rates on hold maintaining the benchmark cash rate of 2.25 percent. Whilst keeping their hands off the interest rate lever this month Governor Glenn Stevens reinforced his willingness to cut further in the future reinforcing his view also that that the Australian dollar is expected to fall further over the medium term. In what proved to be a volatile session for the Australian currency, the higher yielding unit initially gained more than one full US cent following the announcement, tipping the scales at a level above the 77 US cents mark. Opening this morning stronger at a rate of 0.7630 the Aussie dollar once again appears stretched on the rallies with dovish overtones from policy makers ultimately weighing on investors looking bank a quick return.
We expect a range today of 0.7590 – 0.7680
New Zealand Dollar:
The New Zealand dollars move to parity when valued against its Australian counterpart received a blow yesterday following the RBA’s decision to keep the benchmark rate unchanged at 2.25 percent. During a session which generally favoured a move out of NZD long positions the Kiwi weakened when valued against the Australian dollar (0.9820) and the US dollar (0.7487). Whilst investors have been starved of any substantial economic developments this week from local sources, broader currency market remain at the mercy of US dollar moves ahead further policy statements from the US Federal Reserve this evening.
We expect a range today of 0.7430 – 7530
Great British Pound:
UK Services PMI stayed in expansion for a 27th consecutive month during April numbers overnight revealed with the read of 58.9 comfortably beating the expected result of 57.1. Despite the positive read the Great British Pound has struggled to maintain its value when compared to the world’s reserve currency as the US dollar advanced off the back of an improved private employment report. Opening more than a full cent weaker this morning at a rate of 1.4808, tonight’s FOMC meeting is shaping up as an important one as dollar moves remains tightly linked to underlying rate expectations. In other currency moves overnight the Sterling has drift lower also against the Australian dollar (1.9399) whilst opening higher against the New Zealand dollar (1.9751).
We expect a range today of 1.9350 – 1.9450
Majors:
US Stocks advanced overnight following comments made by Minneapolis Fed President Narayana Kocherlakota who stated that Fed officials would need to remain extremely patient when raising interest rates suggesting that an early rise would threaten underlying employment and price objectives. Whilst having only a minimum impact on the US dollar, the greenback has enjoyed a solid 24 hour window gaining ground when valued against both the Euro (1.0817) and the Yen (120.270) after a report showed US job openings surged to a 14 year high during February. Signalling strong employment gains, it’s exactly the type of re-assurance investors required following Fridays disappointing non-farm result. With the US dollar broadly stronger upon open this morning all eyes will be the FOMC’s most recent meeting minutes this evening.
Data releases
AUD:No data today
NZD: No data today
JPY: BOJ Press Conference
GBP: BOE Credit Conditions Survey
EUR: Retail Sales m/m
USD: FOMC Meeting Minutes, FOMC member Dudley Speaks