Australian Dollar
Expected Range 0.6800 – 0.7050
The Australian Dollar fell to its lowest levels since 2009 after continuing concerns about the Chinese economy and falling oil prices. The Chinese stock market continued its fall on Friday losing 3% after losing almost 20% on the year. The main trading partner of Australia continues to slowdown causing concern for the AUD. Oil prices continued to fall from an oversupply of oil in the market and has gone below $29 for the first time in 12 years. With limited data out today locally the focus once again will be on China and commodity prices. The AUD will open today at 0.6854.
New Zealand Dollar
Expected Range 0.6390 – 0.6550
The New Zealand Dollar tested 0.6400 late on Friday falling to new 3 month lows before gaining some ground to close only slightly down from Thursday’s close to finish at 0.6461. Falling commodity prices, specifically oil prices falling below $29 for the first time in over a decade, have weighed on the NZD. As a result of the continued weakness in commodity and an increasing risk aversion has meant that the NZD has continued its slide and with no data out locally the main focus will be on commodity prices through Monday. The New Zealand dollar has tumbled over the course of the past five days in what’s very much been an environment void of any underlying risk-taking. Comfortably erasing what was an incredibly positive end to 2015, the New Year has bought with it a level of volatility many thought only China had the capacity to deliver with equity markets taking the brunt of those falls. Well off the highs of early last week the New Zealand dollar currently buys 65.41 US Cents. Whilst it’s hoped the coming 24 hour window should bring with it calmer waters, the moves of policy makers within China will once again be closely monitored.
Great British Pound
Expected Range 2.0600 – 2.0950
The Great British Pound finished the week positively against the AUD on Friday to close at 2.0761. With discussions about whether or not the UK should stay in the Euro zone starting to pick up in there is continued to uncertainty over where it will leave the UK economy. The Bank of England’s meeting minutes from the meeting last week where they kept rates on hold mentioned that they have some concerns over what will happen after that. The GBP opens today at 2.2032 against the NZD and 1.4252 against the USD.In what’s been an incredibly rocky start to 2016 the Great British Pound slumped to a fresh five and a half year low when valued against its US Counterpart on Friday. Falling for much of last week, growth concerns out of China amid a slump across key commodity markets heightens the risk that the Bank of England will struggle to raise interest rates at all during the coming 12 month window. Depreciating also versus the euro for a seventh consecutive week (it’s longest losing streak since April 2011) the Sterling looks distinctively under pressure this morning. Having reached a low of 1.4506 the Great British Pound opens weaker against the Greenback as it currently swaps hands at a rate of 1.4516.
Majors
Expected Range N/A
The JPY continues to strengthen against the USD on Friday with the US retails sales data coming out at -0.1% for the month of December. There is some speculation that the strengthening Yen may lead to the bank of Japan to increase its monetary stimulus in an effort to devalue the JPY. The Euro closed up on Friday against the USD to close at 1.0906. The Euro Zone announced their trade balance data with the results coming in slightly ahead of expectations 22.7 Billion vs 21.1 Billion and combined by the weak US retail sales data helped to increase the Euro value against the Dollar. The USD retails sales data coming in at -0.1% combined with a weaker industrial production numbers meant resulted in a weaker USD against non-commodity linked currencies but was able to improve against the commodity linked currencies such as the AUD and NZD.