Australian Dollar:
The Australian dollar tracked higher when valued against its US Counterpart yesterday, making the most of what’s been a more steady and risk neutral trading window. Supported by a strong rebound across global equity markets, speculation has also increased that China will continue to stimulate there flagging economy after a report overnight showed Imports during August fell for a 10th consecutive month. Breaking through the 70 US Cents handle the Australian dollar opens notably stronger this morning as it currently buys 70.17 US Cents. In addition to the Westpac consumer confidence survey which is scheduled for release this morning, investors will also be tuning into a speech by RBA Deputy Governor Philip Lowe who will be discussing economic conditions and the prospects for the Australian economy in Melbourne today.
We expect a range today of 0.6960 – 0.7050
New Zealand Dollar:
Global commodity and equity markets have been pushed higher over past the 24 hours amid renewed optimism China’s government will act to support growth initiatives for the world’s second largest economy. Bolstering investors’ appetite for risk, a notable change in mood has assisted commodity-backed units overnight, a shift in sentiment initiated out of China. Rallying from an earlier low of 0.6257 when valued against its US Counterpart the New Zealand dollar opens this morning well above the 63 US Cents mark as it currently buys 63.40 US Cents. Whilst the main focus this week remains the RBNZ’s interest rate decision tomorrow, moves out of China have one again proved pivotal in determining the Kiwi’s near-term value.
We expect a range today of 0.6300 – 0.6400
Great British Pound:
The Great British Pound has recovered from August’s dramatic sell off during the early parts of this week reaching a high of 1.5412 when valued against its US Counterpart overnight. Gaining momentum off the back of improved global risk flows, resistance around the 1.5400 mark remains solid with its upward trajectory today needing to remain intact ahead of tonight’s manufacturing release. Looking further ahead the BOE’s monetary policy statement on Thursday will also be critical in determining the medium-term value of the GBP/USD as it remains closely linked to underlying rate expectations. Stronger against the Greenback at 1.5393 the Sterling is lower against the Aussie (2.1932) and the Kiwi (2.4258).
We expect a range today of 2.4210 – 2.4330
Majors:
Trade numbers from China set the tone early for markets overnight after exports grew in August whilst a shortfall on the import side simply enhanced expectations surrounding a possible policy response. With stocks in China surging government officials announced yesterday they would remove tax on dividend returns for investors who held stocks for a period longer than one year, a measure designed to encourage a longer-term holding. In broad based gains Germany also enjoyed some positive trade results, recording a trade surplus of $25 billion, topping its previous all-time high. Showing clearly the benefits of a lower Euro, exports comfortably outstripped imports as offshore demand fuelled the majority of purchases. In a session favouring growth and commodity backed currencies the Euro is stronger versus the Greenback at 1.12000 whilst the US dollar opens stronger versus the Yen (119.844).
Data releases
AUD: Westpac consumer sentiment, Home Loans m/m, RBA Deputy Gov Lowe Speaks
NZD: No data today
JPY: Consumer Confidence
GBP: Manufacturing Productions m/m, Trade Balance
EUR: No data today
USD: No data today
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