Australian Dollar:
The Australian Dollar enjoyed a reprieve from its rapid downturn yesterday bolstered by the largely anticipated Reserve Bank decision to maintain the current cash rate at 2.00%. While adopting a Dovish tone the RBA failed to offer an explicit indication that further easing is imminent allowing Aussie bulls to carry the AUD through key resistance levels above 0.7670-80 and offer a short term break in the overriding bearish trend. The AUD found further support in optimism garnered from calls that Greek creditors are adding the final touches to a draft agreement, that should Athens accept, will release a new tranche of aid to the embattled government. Bouncing through 0.77 and 0.7750 the Aussie touched overnight highs of 0.7790 before meeting resistance and edging lower into this morning’s open. Attentions now turn to First Quarter GDP results with analysts anticipating a 0.6% expansion. A print above this could force a break above 0.78 although a poor read (a possibility given the poor CAPEX print) could see a shift back toward 0.76.
We expect a range today of 0.7600 – 0.7850
New Zealand Dollar:
The New Zealand dollar offered little through domestic trade Tuesday maintaining a tight trading range between 0.7090 and 0.7125 before optimism surrounding a draft agreement between Greece and her creditors funded an upward push. The Kiwi jumped nearly 100 points touching intraday highs of 0.7201 before a larger than anticipated decline in the Global Dairy Trade Index capped the advance. Opening this morning buying 0.7178 US cents attentions now turn to key commodity prices and prelim US employment data for direction through mid-week trade.
We expect a range today of 0.7075 – 0.7275
Great British Pound:
The Great British Pound enjoyed a spike through Tuesday jumping nearly 200 points and touching intraday highs of 1.5366. Sterling took advantage of a shortening in USD longs and an uptick in Construction PMI and net-lending to individuals with additional support found in news Greek creditors were close to finalising a draft agreement on reform that would open up fresh assistance to a cash strapped Athens should they accept it. Having broken the 7 day bearish run attentions now turn to services PMI ahead of tomorrow’s MPC policy announcement.
We expect a range today of 1.9580 – 2.0080
Majors:
The US dollar posted one of its largest single day losses in the last 2 years Tuesday plunging against a basket of counterparts. Markets pounced on calls Greek creditors were putting the final touches to a draft agreement that if accepted by Athens will open up a new tranche of assistance ahead of its 300 million Euro IMF repayment due Friday. The Euro jumped 2.5% touching intraday highs of 1.1190 as Greek optimism coupled with a jump in Euro zone inflation and spike in German 10 year Bund yields helped fuel support for the common currency and forced investors to shorten their dollar long positions. Attentions now turn to key European services data, an ECB monetary policy announcement and further debt developments ahead of Fridays Non-Farm payroll report wherein a strong print will likely force the Euro back toward 1.10.
Data releases:
AUD: AIG Services Index and GDP q/q
NZD: ANZ Commodity Prices and GDT Price Index
JPY: No Data
GBP: Nationwide HPI m/m and Services PMI
EUR: Spanish, Italian, French, German and Eurozone Services PMI, Italian Monthly and Quarterly Unemployment Rates, Retail Sales, Unemployment Rate, ECB Rate Announcement and ECB Press Conference.
USD: ADP Non-Farm Employment Change, Trade Balance, ISM non-Manufacturing PMI, Final Services PMI, Crude Oil Inventories and FOMC Member Evans Speaks