Australian Dollar:
Having traded sideways during the majority of yesterday’s session the Australian dollars trajectory headed north late in the afternoon, passing through the 78 US Cents level as North American players entered the frame. Reaching an eventual high (albeit a short-lived one) of 0.7849, the move higher was triggered by dovish perceptions over the outlook of Fed rate hikes. With many Fed watchers pushing back the time lime from September to December, the higher dollar in the short-term continues to further create challenges for domestic policy makers who have regularly communicated their desire for a lower currency. Despite deteriorating terms-trade, softer numbers in China as well domestic fragilities, last night’s moves once again highlight just how reliant the RBA now is on the US Federal Reserve on delivering a timely rate hike. This morning the Australian dollar is stronger as it buys 77.99 US Cents.
We expect a range today of 0.7750 – 0.7830
New Zealand Dollar:
During a choppy session for the New Zealand dollar, the Kiwi initially slumped lower yesterday following the release of a quarterly GDP print which comfortably fell short of expectation. Recording a mere 0.2 percent expansion in the March 2015 quarter (versus a growth forecast of 0.6 percent), New Zealand’s currency reached a low of 0.6880 when valued against the Greenback, more than one US cent below its opening level. Despite the threat of substantial losses early the piece the Kiwi has rebounded somewhat upon open this morning with a broadly weaker US dollar substantially assisting its cause. The Kiwi currently swaps hands at a rate of 0.6926.
We expect a range today of 0.6880 – 0.6970
Great British Pound:
Assisting the Great British Pounds advance overnight Retail Sales during the month of May grew by 0.2 percent, a number strong enough to beat initial consensus estimates. Whilst negative Greek headlines continue to dominate European news flows, unemployment, CPI and retail sale numbers have all come in either on or above forecast this week. Opening notably stronger amidst a weaker Greenback at 1.5878 there has also been some significant moves higher when valued against the New Zealand dollar (2.2913) whilst lower against the Aussie (2.0352).
We expect a range today of 2.0300 – 2.0400
Majors:
The US dollar Index, a measure of the Greenbacks value against a basket of currencies, touched a one month low overnight as investors continued to show clear signs of uncertainty about the size and frequency of future interest rate rises. Whilst investors were hopeful of a more upbeat rhetoric, there were some signs that economic growth has started to make itself more evident following the release of US Consumer Prices which posted the largest monthly increase in more than two years, accelerating at a pace of 0.4 percent. In other macro developments jobless claim applications fell last week to a 15-year low whilst factory activity picked up to a six month high. In the context of last night’s numbers, the corresponding US dollar moves highlight just how important the underlying stance of the US Fed remains. With US dollar weakness helping explain the stubbornness of the Euro which is higher this morning at 1.1362 a further breakdown in debt negotiations has seen an emergency summit in Greece pushed forward until Monday.
Data releases
AUD: No data today
NZD: No data today
JPY: BOJ Press Conference, Monetary Policy Statement
GBP: Public sector net borrowing,
EUR: ECOFIN Meetings
USD: No data today
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