Australian Dollar:
The Australian dollars downward correction deepened Wednesday as the Greenback rally continues. Domestic data offered little support and investors began to square positions leading into the FOMC meeting minutes. The Fed adopted a somewhat hawkish tone suggesting that slowdowns in consumer spending and softening consumer sentiment were merely an anomaly and were not indicative of a profound longer term shift. Policy makers expect growth will improve through the back half of the year leaving upward rate adjustments on the table. Having given up much of the gains enjoyed last week following Wednesdays soft U.S retail sales report we expect AUD support to kick in on approaches to 0.7850 and 0.7800 as attentions turn offshore to key U.S housing and manufacturing numbers.
We expect a range today of 0.7800 – 0.8010
New Zealand Dollar:
Much likes its antipodean cousin the Kiwi was forced lower as markets looked to fuel the Greenback relief rally. Investors responded to a somewhat hawkish FOMC meeting minutes wherein an upward adjustment to monetary policy is still expected before year end. Touching intraday lows of 0.7281 the Kiwi opens this morning below 0.73 buying just 0.7298 U.S cents. The NZD is on the cusp of breaching 12 month lows as attentions turn to the Annual budget release and key U.S manufacturing and housing data for direction and support through Thursday.
We expect a range today of 0.7240 – 0.7380
Great British Pound:
The Great British Pound defied the broader trend Wednesday advancing against the USD and moving back through 1.55. Touching intraday highs of 1.5590 Cable found support as investors squared positions after Tuesdays sell off. Key fiscal and monetary policy figureheads BoE governor Mark Carney and Chancellor of the Exchequer George Osborne sort to rectify deflationary fears suggesting the annual downturn in prices was an anomaly and that a return to the targeted 2% inflation is expected into the end of the year. Attentions now turn to a crucial retail sales print for a deeper read on economic performance and consumer confidence.
We expect a range today of 1.9575 – 1.9975
Majors:
The U.S Dollars upward push continued Wednesday as the world’s base currency moved through three week highs against its European counterpart. After a string of softer than anticipated economic indicators throughout the year to date market attentions were keenly focused on the FOMC meeting minutes seeking direction and guidance framing a U.S rate adjustment. The minutes showed policy makers noted the idle start to the year but expect the pace of growth to quicken and the slack absorbed in the third and fourth quarters of 2015. The suggestion that softer growth is an anomaly rather than the beginnings of a deeper slowdown has fuelled support for the Greenback with the majority of analysts pricing in a monetary policy amendment before year end. The Euro slipped below 1.11 touching intraday lows of 1.1061 as markets responded to ECB plans to pre purchase bonds in a bid to combat seasonal slowdowns and maintain record low interest rates. The European Central Banks move has forced investors to consolidate and reassess Euro shorts ending the block unit’s advance ahead of 1.15. Attentions now turn to key Manufacturing and Services data throughout Europe with a soft print likely to force a deeper correction toward and through 1.10.
Data releases:
AUD: RBA Assistant Governor Edey Speaks and MI inflation Expectations
NZD: Visitor Arrivals m/m, Annual Budget Release and Credit Card Spending y/y
JPY: Flash Manufacturing PMI and All Industries Activity m/m
GBP: Retail Sales m/m and CBI Industrial Order Expectations
EUR: French, German and Eurozone Flash Manufacturing PMI, French, German and Eurozone Flash Services PMI, Consumer Confidence and ECB Monetary Policy Meeting Minutes.
USD: Unemployment Claims, Flash Manufacturing PMI, Existing Home Sales, Philly Fed Manufacturing Index and FOMC members Fischer and Williams Speak.