Australian Dollar
Expected Range 0.7480 – 0.7730
The Australian Dollar fell sharply through trade on Monday as softer than expected retail sales and falling commodity prices saw the unit shed some 80 points. Both oil and copper prices came under pressure in early trade and when coupled with flat retail sales growth the Aussie tumbled through 0.7650, touching intraday lows at 0.7592. Losses were somewhat capped by continued USD weakness as investors again adjusted interest rate expectations with the majority of analyst now looking beyond July for the second Fed rate amendment. Attentions today turn to domestic Trade Balance numbers ahead of the RBA’s cash rate announcement and accompanying rate statement. While markets anticipate the Reserve Bank will refrain from adjusting rates the accompanying statement will be closely scrutinised as analyst seek any amendment in language and rhetoric that might suggest a move away from the current neutral policy standing. Recent currency gains may prompt renewed policy jawboning in a bid to deflate the Aussie and force it back toward what the RBA deems fair value nearer 0.70 U.S cents.
New Zealand Dollar
Expected Range 0.6730 – 0.6930
The New Zealand dollar was one of the biggest losers among developed economies through trade on Monday plunging some 85 points to touch intraday lows at 0.6820. With little data available domestically the Kiwi was at the mercy of wider risk flows and market trends as tumbling commodity prices, namely copper and oil, forced a selloff in commodity driven currencies and saw the NZD edge lower across the entire trading session. Attentions today turn to headline US services data and trade balance numbers as the domestic economic docket again lacks significant macroeconomic indicators.
Great British Pound
Expected Range 1.8525 – 1.9025
The Great British Pound jumped higher through trade on Monday buoyed by stable construction PMI and continued USD weakness. Sterling broke through 1.4250 and 1.4300 touching intraday highs at 1.4321 as investors continued to push out expectations surrounding a Fed rate adjustment. Central Banks remain in focus this week and markets appear to now be looking beyond July for the 2nd fed policy amendment. Attentions today turn to Services PMI for direction through the domestic session ahead of tomorrow’s FOMC march meeting minutes.
Majors
Expected Range N/A
A lack of significant headline data meant a relatively quiet overnight trading session in which investors continued to push out expectations of a FOMC rate adjustment. Softer than anticipated factory orders saw markets give back the marginal gains garnered in the wake of Friday’s modest employment data and the Greenback fell to fresh two week lows against the Yen, while the DXY (Dollar index) edged closer to five and a half month lows. The USD suffered its worst weekly sell off in just on 2 months last week as investors reacted to commentary from Fed Chair Janet Yellen extending the timeline of expectation on monetary policy changes. Fed Funds futures contracts suggested that just 40% of analysts and investors are pricing in a rate amendment in July despite policy meeting in both April and June. At this point markets appear steadfast in their assumption that there is little chance of a policy shift in the short term. Attentions today turn to Services data and Trade Balance numbers for direction ahead of Wednesday’s FOMC March meeting minutes. Investors will be keenly attuned to Wednesday’s minutes for any guidance on forward thinking and policy action, any implication the market has adopted an overly bearish and pessimistic view could lend itself to a USD rebound.