Australian Dollar
Expected Range 0.7250 – 0.7330
Opening the New Year just below the 73 US Cents handle when valued against its US Counterpart, the Australian dollar performed strongly during the final quarter of 2015, bouncing from a low of 0.6896 in early September. Despite a decline of 11 percent over the past 12 months, the Australian dollar over the past four month window has been extremely resilient attracting interest from both traditional and non-traditional sources. Whilst there remains a general consensus that market participants remain too complacent when it comes to US rate expectations for the next 12 months, the fact the RBA has moved away from its aggressive rhetoric against the Aussie dollar suggests also that policy makers are comfortable with its current value. Opening on a solid footing this morning the Australian dollar currently buys 72.95 US Cents.
New Zealand Dollar
Expected Range 0.6800 – 0.6870
Indicative of the holiday season, trading ranges have remained well and truly contained over the past week, with the New Zealand dollar drifting almost aimlessly when valued against its US Counterpart. Starting the New Year at a rate of 0.6837, despite annualised falls worth around 12 percent, similar to its Trans-Tasman rival the New Zealand dollar has done very well during the final 3 months of 2015, being one of only two currencies across the G10 to appreciate when valued against the world’s reserve currency. Whilst the New Year promises to be another challenging period, particularly given fears of softer growth across broader Asia, commodity falls and interest rate settings will also be of critical importance.
Great British Pound
Expected Range 2.0170 – 2.0260
The Great British Pound has
struggled for much of the past week, falling to fresh lows when valued against
its US Counterpart. Touching an early morning low of 1.4731, the risks are abundant
for the Great British Pound with any underlying economic weakness likely to further
deter the Bank of England from raising interest rates during the first half of
the New Year. Whilst underlying inflation remains crucial, this week investors
will be keen to see some progress ahead of data on Manufacturing, Construction
and Lending. Lower across the board this morning, the Sterling is weaker
against the Greenback (1.4733), the Aussie (2.0212) and the Kiwi (2.1569).
Majors
Expected Range N/A
Given the outlook for both iron ore and Brent crude oil remain relatively weak, global equity markets remain poised for a relatively flat start to the New Year. With unprecedented levels of monetary stimulus still readily available across the globe, the size and integration of existing monetary settings has 2016 shaping up as an eventful year with the Bank of England expected to become only the 2nd of the world’s big Central Banks to tighten policy over the coming months. Following in the footsteps of the Federal Reserve who did so for the first time in nine years in December. Having now appreciated for three consecutive years (gaining 8.9 percent during 2015), the Greenbacks trajectory during the first half of 2016 will remain well and truly in the hands of economic fundamentals as investors remain keen to see strong data points to support the Fed’s outlook that four additional hikes will occur over the coming 12 months. Lower against the Yen this morning at 120.191 the Greenback is stronger against the Euro (1.0863).