Australian Dollar
Expected Range 0.7550 – 0.7700
The Australian Dollar has continued its good run against the USD touching 8 month highs of 0.7656 following on from the Federal Reserve’s downgrading of its interest rate projections and some positive news out of the Australian Labour market. The Fed’s statement was more dovish than the market expected and weighed heavily on the USD during early Thursday trade. Then the employment data out of Australia showed an unexpected fall in the unemployment rate to 5.8% from 6.0% which lifted the AUD through 0.76 for the first time since July of last year. Through all of this commodity prices have continued to strengthen giving further support to the AUD. With no data to be released today the AUD will take direction from overseas markets.
New Zealand Dollar
Expected Range 0.6750 – 0.6950
The NZD opens 1.5% up from yesterday’s open to buy 68.45 US cents which is the highest it has been this year. The theme of the day was the markets reacting to comments from the US Federal Reserve which has seen investors move away from the USD in a significant way. The dovish statement suggesting that they will not be raising interest rates as fast as expected and is a change of direction from last year where the outlook remained relatively positive. The NZD did see lows of 0.6575 in the lead up to the Fed’s decision before rebounding strongly after the decision. Also gaining ground after a better than expected GDP number showed a gain of 0.9% against expectations of 0.6%.
Great British Pound
Expected Range 1.8700 – 1.9200
The Great British Pound opens this morning buying 1.8950 AUD up slightly from yesterday’s open after initially falling to intraday lows of 1.8653 the GBP was supported strongly following on from the Bank of England’s decision to keep interest rates on hold at 0.5% for the 84th month in a row. They noted that the fall in the GBP was linked to the potential exit from the Eurozone and while it was likely going to put upward pressure on inflation the weaker outlook for global trade would offset the impact. The weaker outlook of global trade was one of the things sighted by the Fed as to why they had dampened expectations of interest rate rises in the US. The GBP also made significant ground against the USD to open this morning at 1.4480 after opening yesterday at 1.4273.
Majors
Expected Range N/A
The main focus for Thursday was the Federal Reserve’s Interest rate decision where their kept rates on hold at 0.5%. After being relatively bullish on the US economy during the back half of last year when they raised interest rates for the first time in 7 years the Fed’s statement indicated that inflation in the US remains below their target rate of 2% and that global economic decisions are not favourable. There was some expectation that the Federal Reserve would back away from its indications that it would raise interest rates 4 times this year however reducing that to 2 along with dovish statement has seen the USD depreciate against all major currencies.