Australian Dollar:
The Australian Dollar moved lower throughout overnight trading after a relatively range bound domestic session. Having struggled to break outside of a 25 point trading bracket the AUD moved back below 0.71 U.S cents as investors absorbed and repositioned themselves in the aftermath of the Fed’s FOMC meeting minutes. The world’s largest Central Bank intimated that a December policy amendment was being strongly considered however not all voting members were convinced data sets were at a level appropriate to justify a policy shift. The ambiguous undertone was enough to bolster the Greenback rally but capped any meaningful upward push and the AUD bounced of supports at 0.7075. Attentions today will be largely focussed off shore as the Bank of Japan releases its monetary policy statement wherein a move to expand the current QE program is largely expected given the turn back into recession.
We expect a range today of 0.7050 – 0.7150
New Zealand Dollar:
The New Zealand dollar opens lower this morning as expectations of a U.S Federal Reserve policy amendment before years end intensify. Several key FOMC officials reaffirmed their positions signalling a December interest rate lift off was likely as long as incoming economic data set cooperate. Touching intraday lows at 0.6433 the Kiwi found some support in the ambiguity of the FOMC’s latest meeting minutes. Despite endorsing the commentary of board members the minutes showed not all members are convinced the timing is right and the collective stance is not yet unified. Bouncing higher this morning the Kiwi has moved back through 0.6450. We expect resistance on moves toward 0.65 as attentions turn off shore to an all-important BoJ press conference.
We expect a range today of 0.6410 – 0.6510
Great British Pound:
Sterling edged higher throughout trade on Wednesday moving back through 1.5200 as investors took advantage of ambiguities in the Fed’s FOMC meeting minutes. While the Federal Open Market Committee supported recent board member rhetoric and hinted that a December interest rate adjustment was appropriate it highlighted the importance of incoming economic data of the next month and suggested not all officials are unified in the push to adjust policy before the year is out. Markets and investors seeking a clear cut signal were disappointed and while the Greenback maintains its bullish trend the minutes allowed a small Cable rebound. Attentions today turn domestically to retail sales while the BoJ dominates global central bank activity.
We expect a range today of 2.1300 -2.1550
Majors:
The U.S Dollar opens this morning largely unchanged after recouping early session losses on upbeat Fed Rhetoric. The dollar relinquished recent gains and moved off 7 month highs as investors cautiously repositioned themselves ahead of the much anticipated FOMC meeting minutes. While individual Federal Reserve officials have proffered an optimistic and buoyant outlook since October the question remained what is the collective stance. Today’s minutes reaffirmed the message and suggested the board “is strongly considering a December rate hike, dependent of course on incoming economic data”. The language and statement was strong enough to drag the Greenback higher across the board moving back through 1.0650 and 123.50 against the Euro and Yen respectively. Investors did note that while it seems a December policy move is the Fed’s base case scenario at present there were some officials that expected data would not meet appropriate targets to justify a lift-off, while others felt the wording too strongly signalled a 2015 policy shift. The result/market reaction was muted as again no clear and definitive signal was extended. Attentions now turn to key macroeconomic data sets for guidance into next month’s policy announcement however we anticipate the Greenback to maintain its bullish run. Asian trade will be dominated by the BoJ policy statement and Press Conference wherein we anticipate a reaction to the week’s earlier GDP downturn and slide into recession.
Data releases:
AUD: No Data
NZD: PPI Input q/q and PPI Output q/q
JPY: Trade Balance, Monetary Policy Statement and BoJ Press Conference and All Industries Activity m/m
GBP: Retail Sales m/m and CBI Industrial Order Expectations
EUR: German Buba President Weidmann Speaks and ECB Monetary Policy Meeting Accounts
USD: Unemployment Claims, Philly Fed Manufacturing Index and CB Leading Index