Australian Dollar:
The Australian dollar continued relinquishing recent gains edging back through 0.71, touching intraday lows at 0.7080. With little domestic data on hand to drive direction throughout Australasian trading hours the AUD bounced about within a relatively tight trading bracket before upbeat US policy expectations and a sideline shift to haven assets forced the Aussie lower. An ever increasing number of analysts are pricing in a Federal Reserve interest rate increase come December bolstering recent Greenback gains and supressing emerging market and G-10 commodity currency advances. With support expected to hold on approaches to 0.7050 and 0.7000 attentions turn to today’s RBA monetary policy meeting minutes as a marker for possible interest rate adjustments. Any suggestion or hint of a dovish undertone will likely force a deeper downward correction.
We expect a range today of 0.7000 – 0.7150
New Zealand Dollar:
The New Zealand dollar edged lower throughout trade on Tuesday despite a better than expected Retail Sales performance. The Kiwi broke below 0.65 touching intraday lows of 0.6486 as investors continue to buy into the Federal Reserve’s December policy adjustment rhetoric. Despite an upbeat retail sales print a somewhat disappointing core retail sales read dragged down NZD optimism and left the commodity driven currency open to a stronger Greenback. Attentions now turn to critical US CPI numbers this evening for direction. A strong print will go a long way to firming trader’s monetary policy expectations and extend the USD advance.
We expect a range today of 0.6400 – 0.6550
Great British Pound:
The Great British Pound edged marginally lower through trade on Monday as investors continue to extend US monetary policy expectations and the gap in policy outlooks widens. With little domestic data on hand Sterling dropped touching intraday lows at 1.5179 before finding support and creeping back above 1.52. With many investors now pricing in loose monetary policy through 2016 attentions turn to crucial US and GBP CPI numbers as markers for possible policy direction.
We expect a range today of 2.1300 – 2.1550
Majors:
The Greenback advanced continued through Monday edging higher, nearing six and a half month highs against the Euro and 7 month highs against the Japanese Yen. Expectations surrounding a Federal Reserve interest rate increase continue to grow with 70% of analyst now pricing in a December policy amendment up from the less than 50% in October. Despite pushing the Euro through 1.07 the 19 nation combined unit was largely unaffected by the horror that struck Paris at the weekend. Investors and traders seem to have, on the whole, taken the weekend’s events in their stride and while there is still geopolitical uncertainty the primary directional focus/stimulant remains diverging monetary policy. The Greenback advanced some 2% against the Japanese Yen Monday charging through 1.23 and touching session highs at 123.27. Official data released by the Japanese Cabinet Office showed annualised growth in the 3 months through July to September shrank 0.8%, marking the second consecutive quarterly contraction and plunging the economy into recession once again. The poor print puts increasing pressure on “Abenomics” as Shinzo Abe struggles to drag the country through a period of chronic stagnation with calls for deeper BoJ stimulus measures likely to be ignored as the Central Bank is expected to maintain the current monetary policy platform when it next meets on Thursday. Attentions now turn to all important US inflation numbers as a critical marker for direction and policy expectations.
Data releases:
AUD: RBA Monetary Policy Meeting Minutes and RBA Assistant Governor Kent Speaks.
NZD: Inflation Expectations q/q
JPY: No Data
GBP: CPI y/y, PPR Input m/m, RPI, Core CPI, HPI and PPI Output.
EUR: Italian Trade Balance, German and EMU ZEW Economic Sentiment.
USD: CPI m/m, Core CPI m/m, Industrial Production and Capacity Utilisation Rate.