Australian Dollar:
The Australian dollar firmed considerably yesterday following a labour market report which showed the official level of unemployment had dropped during the month of November from 6 percent down to 5.8 percent. Surprising many investors who were looking for a negative correction off the back of Octobers strong advance, 71 400 new jobs were created last month with 41 600 of those full-time positions. Lifting the Australian dollar temporarily back up above the 73 US Cents handle, the Aussie managed to trade as high as 0.7334 when valued against its US Counterpart, settling this morning at a rate of 0.7288. In what’s shaping up to be a slightly quieter end to the week, macro developments from the United States this evening will be the key contributor to near-term direction
We expect a range today of 0.7220 – 0.7320
New Zealand Dollar:
Proving to be a remarkable day for the New Zealand dollar, demand for the Kiwi soared early in the session following Graeme Wheelers decision to cut the official benchmark cash rate to 2.5 percent. Soaring to a session high of 0.6782 when valued against its US Counterpart, the extent of the rally caught many investors off guard, with the hawkish language surrounding inflation and the subsequent shift to a more neutral setting, explaining some of the upside move. In light of the medium-term outlook which appears somewhat clouded, deviating monetary settings when compared to the United States would tilt the risks towards the downside. Meanwhile this morning the New Zealand dollar has done well to consolidate its gains over the past 24 hours is it currently buys 67.50 US Cents.
We expect a range today of 0.6700 -0.6780
Great British Pound:
Trading between a range of 1.5111 -1.5202 when valued against its US Counterpart overnight, the Great British Pound has struggled to maintain its value closer to the top end of yesterday’s range in light of the Bank of England’s decision to keep interest rates on hold at 0.5 percent. Voting also to keep the asset purchase target unchanged, the rhetoric continues to be focused on inflation or more importantly the absence of. Given the subdued inflationary backdrop market participants have for the time being interpreted the BOE’s stance as slightly dovish. Opening weaker against the US dollar (1.5158), the Sterling is also lower when valued against both the Aussie (2.0794) and the Kiwi (2.2447).
We expect a range today of 2.0750 – 2.0890
Majors:
In economic reports released overnight, the number of Americans who filled for unemployment claims rose to a five-month high last week, increasing to 282,000 for the week which ended Dec 5, its worst reading since early July. In other news, imported inflation fell to 0.4 percent in November, a figure which surprised very few given the strength of the US dollar amid tumbling oil prices. Whilst both data prints were clearly on the soft side investors have remained generally sidelined over the past 24 hours ahead of tonight’s main event which includes reads on consumer sentiment and retail growth. In currency moves, conditions have favoured a stronger US Dollar overnight with The Dollar Spot Index, a measure which tracks the currency versus 10 counterparts, finishing 0.3 percent higher. With Wall Street also snapping a three day losing streak, the euro failed to keep pace as the shared unit opens marginally weaker this morning at a rate of 1.0924.
Data releases
AUD: No data today
NZD: No data today
JPY: No data today
GBP: MPC Member Weale Speaks
EUR: Targeted LTRO
USD: Core Retail Sales m/m, PPI m/m, Retail Sales m/m, Prelim UoM Consumer Sentiment
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