New Zealand Dollar:
The New Zealand dollar slumped as global dairy prices eased after declines in milk powder and butter drove a 3.1% drop across the board. Whole milk powder and butter prices fell 4.5% and 11.1% respectively surprising investors and forcing a knee jerk reaction from traders. The Kiwi plunged 70 points moving through 0.68 to touch session lows of 0.6730 and we open this morning buying 0.6753 U.S cents. Attentions turn to a quiet economic calendar and another relatively data-less session ahead as investors look to Thursday’s ECB press conference as the marker for direction into the weekly close.
We expect a range today of 0.6710 – 0.6850
Australian Dollar:
The Australian Dollar rose during domestic trading hours following the release of the Reserve Bank (RBA) minutes. Touching intraday highs at 0.7298 resistance pressure forced the Aussie lower into the close hovering just above support at 0.7250. The minutes released yesterday did not imply a change to monetary policy was imminent or on the cards and markets anticipate the Central bank will keep the Cash Rate at 2% when they next meet in November. Stronger than expected Housing Starts helped the USD recover early losses and sees the AUD open buying 0.7255 U.S Cents. Attentions turn to commentary offshore again for direction in what should be a relatively quiet trading day in the absence of headline market news.
We expect a range today of 0.7250 – 0.7300
Great British Pound:
The Great British Pound was again range bound in a session free of headline data cues and struggled to break above 1.55. Comments from Bank of England Governor Mark Carney failed to stimulate activity as investors seem keen to sit on the sidelines ahead of tomorrow’s ECB press conference. Attentions today turn again to the Central Bank head as he wades into the Brexit debate offering commentary following a report detailing the impact on the economy and banking should the UK leave the EU. Carney’s comments could prove pivotal in steering direction in the upcoming referendum debate and could offer an insight in the future of European economics and politics.
We expect a range today of 2.2650 – 2.3050
Majors:
Despite an essentially data-less global trading session the Euro recouped much of the losses suffered through Monday advancing following comments from ECB policymaker Christian Noyer. The Central Bank board member stood as an advocate for the current easing package suggesting “the current program is well calibrated and does not yet need adjustment”. The remarks in combination with an uptick in Quarterly lending across the 19 nation currency block reduces the need and speculation the ECB will extend/increase its current bond buying program when it meets tomorrow. Touching intraday highs of 1.1387 Euro buying forced the Dollar index lower in the face of mixed domestic data. Despite an increase in housing starts a decline in new building permits suggests a slowdown may be imminent and will likely weigh on the minds of Fed officials when they meet next week. With future monetary policy heavily dependent on data cues policy makers will no doubt be looking for stronger signals of recovery and future price pressure before pulling the trigger. Attentions turn to central bank action into the end of the week with the Bank of Canada scheduled to release a policy statement and rate decision Wednesday ahead of the ECB press conference and policy announcement Thursday.
Data releases:
AUD: CB and MI leading Indexes
NZD: Visitor Arrivals m/m and Credit Card Spending y/y
JPY: Trade Balance and All Industries Activity m/m
GBP: BoE Governor Mark Carney Speaks and Public Sector Net Borrowing
EUR: No Data
USD: Crude Oil Inventories and FOMC Member Powell Speaks