Australian Dollar: A difficult week for the Australian Dollar did not get any easier on Friday as a slowdown in manufacturing across the globe hit hard on market sentiment. In local hours the Aussie fell after Chinese PMI dropped to 50.4, testing lows near 0.9650 before gravitating higher to trade just below 97 cents by the close of Asian markets. Offshore hours did not hold any relief as manufacturing in the UK, Europe and America posted readings below forecast as well as a worrying decline in the number of jobs added on the US non-farm payrolls. The 96 cent barrier looked shaky for awhile however end of week positioning and some profit-taking saw the Aussie lift to close the week just below 0.9700. This week the local unit faces heavy economic calendar, ANZ job advertisements and company operating profits may hold a mild sway this morning ahead of the much anticipated RBA cash rate meeting tomorrow.
We expect a range today of 0.9620 to 0.9715
New Zealand Dollar: The New Zealand Dollar lost ground during its local session on Friday as weaker than expected manufacturing in China raised concerns over the region's economic recovery. A close trading partner with China, the Kiwi naturally lost ground and dipped below 0.7490 before hope of monetary expansion in the emerging economy started to support the exchange rate. Weakness in the US dollar also helped the Kiwi pare earlier losses and highs near 0.7560 were approached before consolidation around 0.7540 saw us into the weekend. A lower sensitivity to China and risk appetite meant the New Zealand dollar gained some conservative ground against its Australian counterpart and it drifted higher to exchange hands at 1.2840 (0.7788) by the close of North American markets.
We expect a range today of 0.7450 to 0.7550
Great British Pound: Support at 1.5400 gave way early on in the Asian session for the Pound on Friday, as downward pressure in the markets proved too much. A slowdown in Chinese manufacturing pushed Cable even lower to 1.5370 before local manufacturing PMI shocked predictions and slipped to its lowest level since 2009. The aftermath sent Cable to lows of 1.5270, its lowest level since January 13, however equally disappointing data from the United States suppressed the Greenback and thus Sterling recovered to finish the week off lows at 1.5350. Trade against the Australian dollar finished up at similar levels to Friday morning and after a rally towards 1.5940 it pared gains to close at 1.5830; trade against the New Zealand dollar was a little more subdued and the Pound fell to 2.0330. A bank holiday today in the United Kingdom will leave Sterling open to the strength or weakness of its counterparts over the next 24hrs.
We expect a range today of 1.5800 to 1.5900
Majors: Renewed concern over the health of the US economic recovery has left the Japanese Yen the primary benefactor during the final hours of trade last week as investors sought refuge in its perceived safety. Following on from an increase in weekly unemployment claims, non-farm payrolls in the US showed a lacklustre 69,000 jobs added in May as well as a revision downward of the number of jobs created in April. Not only did the unemployment rate in the US rise to 8.2% as a result, but soon after it was also revealed that manufacturing sector had slowed. With concern over Spains debt and the health of the banking sector forming a black cloud over the markets the safe-haven flows that will continue in this environment found themselves re-directing away from the Greenback and into the Yen. The USD/JPY dropped sharply towards 77.70 and despite an initial recovery the pair traded back towards this level to close the week below the 78.00 handle. The euro gained a few hours of relief as focus moved off Spain and Greece for the time being and this led to a rise in the exchange rate to closing levels of 1.2430. Opening this morning, markets will be watching Europes Sentix Investor Confidence for an indication of the health of the European economy.
AUD: ANZ Job advertisements
NZD: No data today
EUR: Producer Price Index, April
GBP: Markets closed
USD: Factory Orders, April
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