Australian Dollar
Expected Range 0.6950 – 0.7030
Since falling to a four month low of 0.6928 when valued against its US Counterpart on Monday the Australian dollar has stabilised over the subsequent period. Struggling for much of yesterday’s session to break back up above the 70 US Cents mark, a high of 0.7020 was briefly witnessed. Despite the calmer waters this week, the turmoil triggered by the events in China last week have left broader market participants rattled, amplifying fears that China’s policy makers are struggling with the size and complexity of active currency management given the volatility it is clearly creating elsewhere. Maintaining a focus on China today investors in the very near-term look towards trade data due to be released early this afternoon. The Australian dollar currently buys 69.84 US Cents
New Zealand Dollar
Expected Range 0.6500 – 0.6580
The New Zealand dollar whilst generally stable has continued to weaken when valued against its US Counterpart overnight. Weighed down by broader commodity falls, the CRB Index, which measures a basket of 19 global commodities touched a fresh 14 year low. In an environment which still very much favours a move back into traditional safe havens, in the absence of a prolonged period of stability from China, its unlikely measures of sentiment will be significantly bolstered. Opening lower this morning at 0.6537 the focus today will be on China’s Trade Balance result for the month of December where it’s expected the number of imports and exports to have contracted.
Great British Pound
Expected Range 2.0610 – 2.0720
The Great British continued its slide yesterday following a report which showed manufacturing production contracted by a whopping 0.4 percent in December, well off the forecasted expansion of 0.1 percent. Really struggling to find support the Sterling hit an overnight low of 1.4351 when valued against its US Counterpart, a level more than two cents below its earlier highs. Pushing the Sterling into oversold territory, downside targets at 1.4310 remain important ahead of Thursday’s interest rate decision which is expected to show the MPC voted 8-1 in favour of keeping monetary settings unchanged. In what could prove supportive any commentary surrounding exchange rate declines or hints of future hikes will be closely watched. Opening significantly lower versus the Greenback (1.4431) the Sterling is also weaker versus both the Aussie (2.0660) and the Kiwi (2.2074).
Majors
Expected Range N/A
Extending a relentless sell-off which saw oil trade below $US30 a barrel for the first time in 12 years, daily falls worth close to 4 percent have once again weighed on broader equity markets. Plagued by deepening concerns over China’s growth trajectory a consistently strong US dollar has also played its role. In light of the US Dollar which has now risen by more than 20 percent since mid-2014, the prospect of potentially four interest rate hikes from the US Fed this year, increases the likelihood of further gains over the coming 12 month window. In addition to oil’s capitulation, capping further advancements overnight, fears of continued volatility from China weigh heavily on broader barometers of risk, casting a huge cloud over the markets ability to overcome such significant hurdles. Opening stronger versus the Yen at a rate of 117.575 the US dollar is steady versus the euro at 1.0858.