Australian Dollar:
Whilst dropping to an intraday low of 0.7976 when valued against its US counterpart yesterday the Australian dollar’s strength has overall been maintained over the past 24 hours. With all eye’s fixed on the US Federal Reserve overnight, policy makers did not explicitly rule out an interest rate rise over the coming months acknowledging instead the economic weakness which has potentially pushed out the lift off point for tighter policy. Repeating that growth will rebound at a moderate pace, the net effect overnight has been further Greenback weakness with investors broadly reluctant to pick up the worlds reserve currency. Having reached a fresh three-month high overnight of 0.8075 the Australian dollar opens this morning trading just above the 80 US Cents mark.
We expect a range today of 0.7950 – 0.8050
New Zealand Dollar:
Having maintained its value relatively well, particularly given the heightened level of volatility which surrounded the Federal Reserve’s Open Market Committee meeting overnight the New Zealand dollar has been dumped by investors upon open this morning. Over a four hour window the Kiwi traded from levels above the 0.7740 mark down to 0.7613 when valued against its US Counterpart a move triggered mainly by the RBNZ’s decision to not only keep the official cash rate unchanged at 3.5 percent but to also drop any reference to the possibility of future rate hikes. Repeating also that the kiwi dollar remains unsustainably high, a dovish rhetoric, mixed with a lower inflation outlook sees the New Zealand dollar currently buy 76.35 US Cents, approximately 0.8 percent lower.
We expect a range today of 0.7600 – 0.7700
Great British Pound:
A stumbling US growth story mixed with a reluctant Fed has supported the Great British Pound once again during overnight trade. Comfortably opening stronger this morning when valued against the worlds reserve at a rate of 1.5436, US dollar long positions have been squeezed a move in line with stalling rate expectations. Whilst the domestic calendar remains very light ahead of manufacturing PMI results which are due on Friday, it’s expected improved sentiment from Europe as well as a stalling greenback should both have a positive bearing on the Sterling over the shorter-term. Meanwhile when valued against the Australian dollar (1.9291) and the New Zealand dollar (2.0240), the pound is also stronger.
We expect a range today of 1.9240 – 1.9350
Majors:
In what’s been the dominant theme across forex markets this week, the US dollar has remained under pressure during overnight trade following a statement by the US Federal Reserve in Washington. Keeping in line expectations that should see the world’s largest central bank raise interest rates for the first time since 2006 over the comings months, those views were re-iterated after the statement repeated the stance that growth will rebound up to a “moderate pace” and that inflation will move back towards its goal of 2 percent over time. Weighing further on the Greenback, figures showed the US economy grew by a mere 0.2 percent during the first three months of this year, well down from the 2.2 percent result from Q4 2014. Choked by a slump in exports and business investment, moderating jobs gains have also played there part. Opening stronger against the Yen this morning at a rate of 119.07, there is sense this morning that markets will continue to track very closely Fed moves until we see rate expectations fulfilled.
Data releases
AUD: No data today
NZD: RBNZ Rate Statement, Official Cash Rate, Building Consents m/m
JPY: Prelim Industrial Production m/m, Monetary Policy Statement, BOJ Outlook report, BOJ Press Conference
GBP: No data today
EUR: German retail sales m/m, Spanish Flash CPI y/y, Spanish Flash GDP q/q, German unemployment change, CPI Flash estimate y/y
USD: Unemployment Claims, Core PCE Price Index m/m, Employment Cost Index q/q, Personal Spending /mm, Chicago PMI
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