Australian Dollar
Expected Range 0.6940 – 0.7030
The Australian share market dropped to a two and half year low on Monday, as doubts over China’s economy continued to paint a gloomy looking picture. With global equity markets also looking extremely wobbly, the Australian dollar has at least for time being stemmed the heavy losses which were witnessed when valued against its US Counterpart last week. Fighting back from a low of 0.6926 to temporarily trade up above the 73 US Cents mark the Australian dollar currently swaps hands at a rate of 0.6983. In the absence of any specific drivers today, risk flows will once again play an important role as will China’s daily fix of the Yuan.
New Zealand Dollar
Expected Range 0.6510 – 0.6580
The New Zealand dollar has stabilised when valued against its US Counterpart over the past 24 hours after policy makers in China reportedly stepped in to set the mid-point of the yuan’s trading band higher. Whilst China’s currency was well supported yesterday, the flow on effects failed to stem losses across boarder equity markets, limited gains for the Kiwi. Opening almost completely unchanged when valued against its US counterpart this morning at a rate of 0.6549, investors remain hopeful that news flows from their largest trading partner will have a stabilising impact unlike the disruptions last week.
Great British Pound
Expected Range 2.0760 – 2.0880
Having traded as low as 1.4493 when valued against its US Counterpart early the piece, a fresh multi year low, the Sterling has rebounded since, assisted by a mild improvement in risk sentiment. Having fallen across eight of the past nine sessions, at this stage yesterday’s upward shift is being viewed simply as corrective, not necessarily indicative of any underlying upward channel. Whilst news flows have been few and far between this week, investors will be looking towards tonight’s manufacturing production print for the month of December. Stronger across the board, the Sterling is higher versus the Greenback (1.4549), the Aussie (2.0836) and the Kiwi (2.2210).
Majors
Expected Range N/A
Whilst a relative sense of calm has been restored during the early parts of this week, the underlying risks still remain as fears persist that further spikes in volatility will follow as policy makers in China intervene to lower the value of the Yuan amid ongoing concerns over capital outflow and the build-up of bad debts. Given now the daily obsession over the Yuan’s fix point, it has been supportive invention over the past 24 hours which has for the time being stopped the rout. Still struggling in the face of tumbling oil prices which hit fresh 12 year lows overnight, a fast approaching corporate earnings season on Wall Street will be closely watched as investors search for a confidence boost. In currency moves the US dollar has been steady overnight, opening marginally higher when valued against both the Japanese Yen (117.516) and the euro (1.0891).