Australian Dollar:
During a relatively subdued southern hemisphere session the Australian dollar maintained a level close the 77.20 US Cents mark, as investors preferred to carry a slightly short-position ahead of the Federal Open Market Committee’s statement on US Monetary Policy. Having initially bounced off support at 0.7645 the Australian dollar came to life after the US Fed lowered its growth estimate for the world’s largest economy during 2015, estimating the US should grow at a rate of 1.8 – 2 percent. Triggering a shift away from US dollar dominated holdings the Aussie has been a major benefactor as it opens in a stronger position this morning at a rate of 0.7754. Looking ahead this evening the focus will remain firmly on US macro developments with Inflation and manufacturing indicators likely to be strong dollar movers.
We expect a range today of 0.7710 – 0.7790
New Zealand Dollar:
The New Zealand dollar enjoyed a temporary jump up above the 70 US Cents mark overnight after the US central bank revised downward their growth forecasts for the remainder of 2015. Whilst communicating that the US economy still remains strong enough to absorb at least one interest rate rise before the end of the year, the net impact of Janet Yellen’s comments were Greenback negative with the US dollar dropping in value versus several major counterparts. Opening marginally stronger this morning buying 69.87 US Cents the Kiwi’s next hurdle today comes in the form of a quarterly GDP print which is expected to show New Zealand’s economy expanded at a pace of 0.6 percent.
We expect a range today of 0.6940 – 0.7030
Great British Pound:
The Great British Pound has jumped to a four-week high when valued against its US Counterpart overnight following the release of weekly earnings data which notched up its strongest increase since mid-2011. With UK unemployment also staying at its lowest level since 2008 Policy makers who unanimously voted last month to keep interest rates at a record low will be keen to see further upside momentum particularly indicators linked closely to higher spending levels and ultimately prices. Outshining all of its major counterparts the Great British Pound opens notably stronger across the board, notching up impressive gains when valued against the US dollar (1.5833), the Australian dollar (2.0418) and the New Zealand dollar (2.2657).
We expect a range today of 2.0370 – 2.0470
Majors:
All eyes and ears have been focused on the US Federal Reserve overnight which maintained a record low benchmark rate, indicating however that the US economy remains on track to see at least one hike before the end of 2015. Policy makers have once again communicated that labour market improvements along with inflation remain the two top objectives with a heightened level of employment gains to date at least being a positive. Indicating that rates rises still remain broadly in line with previous expectations the only real impact on financial markets came off the back of reduced growth projections through to years end. Opening lower against the Euro and the GBP, the Greenbacks value is also being influenced by broader risk indicators, which given the uncertainty surrounding Greece favour a flight to safety. On the outlook this evening, Euro group meetings along with a CPI print from the US promise to be of critical importance.
Data releases
AUD: No data today
NZD: GDP q/q
JPY: No data today
GBP: No data today
EUR: Targeted LTRO, Eurogroup Meetings
USD: CPI m/m, Core CPI m/m, Unemployment Claims, Current Account, Philly Fed Manufacturing Index
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