Australian Dollar:
The Australian dollar fell against the world’s base currency through trade on Thursday touching intraday lows of 0.7177. The AUD edged lower following a disappointing NAB quarterly business confidence review leaving it open and vulnerable to technical support points. Plunging through 0.72 the Aussie found support as markets responded to comments from ECB president Mario Draghi. The ECB representative’s dovish commentary prompted a rally across the majority of commodity driven and emerging market currencies as expectations the expansion in the Banks Bond buying program will lead to an influx in liquidity, a positive for the risk driven AUD. Having moved back to touch 0.7235 the Aussie eased into the close as an uptick in U.S home sales and reduction in weekly unemployment claims prompted speculation a December rate amendment was still on the table. The domestic docket remains free of headline date events and attentions turn to European manufacturing and services data for direction into the weekend.
We expect a range today of 0.7160 – 0.7280
New Zealand Dollar:
The New Zealand Dollar rallied through trade on Thursday after comments from ECB president Mario Draghi sparked a rally in commodity and emerging market currencies. Finance Minister Bill English set the trend signalling the NZD had adjusted considerably and was likely nearing fair value. The Kiwi surged upward touching intraday highs at 0.6819 against the USD and rallying almost 3% against the Euro as suggestions the ECB will add to its current arsenal of monetary policy tools increased liquidity expectations, a positive for risk on investments. With little of note on the domestic economic docket attentions will turn offshore to European Manufacturing and Services data as markers for possible ECB action come December.
We expect a range today of 0.6730 – 0.6850
Great British Pound:
The Great British Pound enjoyed a mixed session through Thursday eventually succumbing to selling pressures following the ECB outwardly dovish press conference. Rallying in early domestic trade Sterling touched intraday highs at 1.5506 after retail sales jumped 1.9%, a print well beyond analysts’ expectations. Cable then slipped in the aftermath of the ECB policy statement as Mario Draghi’s dovish tone increased expectations of additional policy action prompting a rally in emerging market and commodity currencies while risk driven assets including US stocks enjoyed a boost. Edging through 1.5450 and 1.54 we open this morning buying 1.5392 as attentions again turn to mainland Europe and a raft of services and manufacturing data.
We expect a range today of 2.1100 – 2.1500
Majors:
The Euro tumbled across the majority of major and emerging market currencies through Thursday following the European Central Banks cash rate announcement and accompanying policy statement. The ECB opted to forego changes to the current monetary policy mandate, a decision widely expected by analysts. Sparks flew when ECB president Mario Draghi proffered a dovish outlook recognising negative inflation and global economic growth concerns were weighing heavily on the 19 nation currency zone. Draghi signalled further extensions to the current bond-buying program and an adoption of wider reaching monetary policy strategies were on the menu as policy makers discussed further cuts to already negative interest rates. “We are ready to act if needed” was the headline statement as the ECB representative looks to December as a marker for action. The Euro plunged to three week lows following the monthly press conference loosing over 200 points and touching 1.1106. The gap between expected monetary policy outlooks widened further when existing U.S home sales surpassed expectations and unemployment claims eased leaving the door open to a possible rate adjustment from the Federal Reserve before year is out. Attentions now turn to a raft of manufacturing and services data for direction across European and North America trade.
Data releases:
AUD: No Data
NZD: No Data
JPY: Flash Manufacturing PMI
GBP: No Data
EUR: French, German and EMU Flash Manufacturing PMI, French, German and EMU Flash Services PMI, Italian Retail Sales and Belgian NBB Business Climate.