Australian Dollar
Expected Range 0.6880 – 0.7140
Australia Day festivities ensured domestic markets would offer little through trade on Tuesday, leaving the AUD open to offshore stimuli. Edging lower the Aussie touch intraday lows at 0.6918 before rebounding oil prices helped bolster commodity driven currencies. Senior OPEC officials leaned on rival oil producers insisting they reduce production in a bid to halt the current rout on Crude prices. The commentary buoyed expectations a deal between OPEC and Russia was nearing sign off and pushed oil back above $30 US a barrel. The bounce helped bolster risk appetite throughout the European and North American trade and the Aussie followed a commodity currency rally led by the oil dependent CAD. Touching intraday highs at 0.7021 the investors refrained from pushing through technical resistance points at 0.7018 and the AUD opens this morning buying 0.7015 U.S cents. Attentions today turn to an all-important 4th quarter CPI print. A positive print could help fuel a rally toward 0.71 and 0.7150 although moves may be moderated as markets keep an eye on the FOMC and Federal funds rate announcement this evening.
New Zealand Dollar
Expected Range 0.6350 – 0.6615
The New Zealand dollar rallied strongly through trade on Tuesday advancing through 0.6450 and 0.65 U.S cents. Encouraged by a return in risk appetite led by rebounding oil prices the investors shrugged off commentary from international ratings Agency Fitch. Fitch suggested the outlook for agricultural exports and a slowdown in residential investment would weigh on GDP growth prospects through 2016 and 2017 capping economic expansion at 2.4% and 2.6% respectively. The comments highlight the vulnerabilities facing the RBNZ and leave the door open for a move toward an easing bias.
Great British Pound
Expected Range 2.0350 – 2.0550
The Great British Pound rebounded strongly through trade on Tuesday advancing almost two cents and touching intraday highs at 1.4366. Buoyed by a recovery in risk appetite investors were encouraged to take profits on Sterling after the unit touched session lows at 1.4117. The GBP has suffered a heavy sell off throughout January as investors extend interest rate expectations and the threat of a BREXIT loom larger. Attentions today turn to Wednesday’s Fed policy statement for direction into the Thursday’s preliminary GDP numbers.
Majors
Expected Range N/A
The U.S dollar enjoyed a mixed session through trade on Tuesday bouncing higher against the CHF, Euro and Yen while relinquishing gains against the Great British Pound and commodity driven currencies. A rebound in oil prices bolstered investors demand for risk pushing the Greenback back through 118.50 JPY. Despite the USD/JPY and EUR/USD rallies the Dollar index edged lower as investors largely ignored a bounce in consumer confidence and rising home prices, seizing profit on GBP and taking advantage of the crude rebound to buy back into CAD. Markets seemed reluctant to push USD rallies ahead of Wednesday’s FOMC statement and Federal funds rate announcement. The disconnect between investor expectations and Fed guidelines will ensure close attention is afforded to the commentary accompanying the decision. Markets will be gauging the Fed’s response to plunging oil prices, a Chinese economic slowdown and seesawing global volatility. With investors pricing in just one rate amendment through 2016 and the Fed’s guideline path proffering four possible rate adjustments there is a gap and scope for another bullish advance should investor sentiment line up with Fed policy.