Australian Dollar
Expected Range 0.7500 – 0.7580
The Australian dollar has once again surged in value versus its US Counterpart overnight after the US Federal Reserve’s policy meeting bought no adjustment to the underlying benchmark rate. Whilst expected, its been the indication that the Fed will now look to raise interest rates only twice during 2016, a downgrade from the previously projected four upward moves which has triggered such a reaction. Weighing heavily on the worlds reserve currency the US dollar has been heavily sold across the board since, a direct result of lower yield promises. Jumping to an overnight high of 0.7560 the Australian dollar finds itself opening in a notably stronger position this morning at a rate of 0.7550. On the horizon today heightened levels of volatility are once again likely as investors look towards the most recent labour market report.
New Zealand Dollar
Expected Range 0.6680 – 0.6760
Recovering from its most recent sell-off which was initially triggered by the RBNZ’s surprise downward move last week, the Kiwi has continued its recovery when valued against its US Counterpart overnight. In light of global pressures which threaten to have a softening impact on the US economy, Janet Yellen announced during the early hours of this morning that the US Federal Reserve will look to raise interest rates more gradually over the coming 12 months. Leading investors to dump to the US Dollar in big volumes, the crucial role of central banks has once again been highlighted. Opening this morning more than two percent higher the Kiwi currently buys 67.34 US Cents.
Great British Pound
Expected Range 2.1140 – 2.1250
Squashing the dollar bulls, downward revisions by the Fed have assisted significantly the Great British Pound overnight. Rallying to a high of 1.4273, the Sterling has been further supported by a strong employment read as well as a report which showed average hourly earnings had pointed in a northerly direction over the past three months. Temporarily countering fears of a UK exit from the Eurozone, it’s been a remarkable 24 hour window, a period which is expected to stretch into this evening’s session ahead of the BOE’s March Monetary Policy Meeting. Stronger versus a weaker Greenback the Sterling opens lower versus both the Kiwi (2.1190) and the Aussie (1.8885).
Majors
Expected Range N/A
Despite market conditions which have stabilised significantly over the past six weeks, the US Federal Reserve adopted a more cautious approach throughout its most recent two day meeting than compared to February. Shifting their interest rate outlook notably to the downside, fresh projections revealed two quarter-point hikes by year end, half the number initially revealed in December. Whilst policy makers pointed towards stronger jobs gains, estimates of growth and inflation were downgraded. Resulting in a large shift away from the US dollar, the Greenback has fallen versus the majority of its key counterparts overnight with bond yields across the board also dropping. In what’s been a familiar move, US Stocks gained, with the S&P 500 hitting its highest intraday level since Jan 4. Whilst the Fed was undoubtedly the focus overnight, there were some positives for the world’s largest economy with data prints on housing and inflation both beating forecast. In what’s set to weigh on the greenback over the medium term, near-term values have been neutralised in light of the flatter looking yield curve.