Australian Dollar:
The Australian dollar has consolidated when valued against its US Counterpart over the past 24 hours, maintaining an opening value above the 74 US Cents mark. Whilst comments from the US Federal Reserve overnight re-iterated the possibility of a rate hike when policy makers meet again in mid-September, statements overnight were in line with a gradual path to normalisation. Opening stronger this morning at a rate of 0.7412 a monthly NAB business confidence read this morning will be a short-term driver ahead over an otherwise quiet looking Tuesday.
We expect a range today of 0.7350 – 0.7450
New Zealand Dollar:
Volatility levels continued to drop overnight with the New Zealand dollar trading in a tight band when valued against its US Counterpart. Oscillating between a low of 0.6556 and a high of 0.6626, the Kiwi opens this morning towards the upper end of that range as is buys 66.14 US Cents. Whilst moves during the early parts of this week have been contained off the back ongoing supportive rhetoric from the US Federal Reserve, the path to higher ground is still expected to create choppy trading conditions ahead. In what’s set to drive the Kiwi’s value this week, investors will continue to monitor macro developments from the United States ahead of Industrial productions figures from China tomorrow.
We expect a range today of 0.6570 – 0.6660
Great British Pound:
Having taken a significant hit last week after the MPC voted 8:1 against a rate hike, the Great British Pound rebounded strongly yesterday bouncing from a low of 1.5450 up to a high of 1.5605 when valued against it US Counterpart. Whilst the lack of global inflation was sighted overnight by the US Federal Reserve as being a point of concern, particularly in the context of record levels of stimulus, the Bank of England remains on course to become the 2nd major central bank globally to raise rates behind only the US Fed. Stronger across the board this morning, the Sterling has notched up gains versus the Greenback (1.5589), the Aussie (2.1024) and the Kiwi (2.3544).
We expect a range today of 2.0960 – 2.1080
Majors:
With the US economy moving towards full employment amidst inflation which remains stubbornly below its 2 percent target, two Federal Reserve officials overnight reconfirmed that the decision to raise interest rates should come soon. Regardless of its exact timing it appears unanimous that once rates lift off, the hiking path will be a gradual one. Supportive of a solid US Dollar the Greenback is stronger against the Yen this morning swapping hands at a rate of 124.594. In other developments the Euro strengthened to a high of 1.1041 as Greece and its international creditors sought to put the final touches to a multi-billion euro bailout accord, a deal it’s hoped will be wrapped up and approved ahead of August 20th, the date when an ECB repayment is due.
Data releases
AUD: NAB Business Confidence
NZD: No data today
JPY: No data today
GBP: CB Leading Index
EUR: German ZEW Economic Sentiment
USD: Prelim Unit Labor Costs q/q, Prelim Non-farm productivity q/q
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