In what proved to be a rollercoaster ride for the Australian dollar on Friday the local unit gyrated between losses and gains in an overall volatile session. Dampening demand for the higher yielding asset in an official report released late Friday China’s manufacturing shrank for the first time in nine months with the PMI Index falling to 49.2 in August from 50.1 in July. Also dominating price action was Ben Bernanke’s annual speech in Jackson’s Hole where he clearly left hopes alive of fresh stimulus when the Central Bank meets in approximately 12 days time after he expressed grave concerns for the outlook of the world’s largest economy. In what is shaping up as an extremely busy week locally, Retail sales are expected to kick things off today followed by the RBA’s monthly cash rate decision tomorrow. Meanwhile this morning the Australian dollar opens in muddied water, trading marginally lower at 1.0282 against its US Counterpart
European stocks recorded three consecutive day of gains driven by optimism central banks from both sides of the Atlantic will opt for new stimulus initiatives to underpin growth.
We expect a range today of 1.0230 – 1.0330
New Zealand Dollar
The conclusion of last week saw a flurry of action across currency markets as investor’s eagerly awaited Ben Bernanke’s speech at the annual Jackson Hole symposium. Whilst falling short of promising immediate action, his comments were positively received by markets as very real concerns were raised over the strength of the world’s largest economy. After starting the day the at a rate of 0.7977 against its US Counterpart the critical 80 US Cents level was comfortably cracked by early afternoon, reaching an eventual high of 0.8042. Despite further signs of weakness out of China attention on the short-term is likely to remain on the US Federal Reserve keeping in mind they next meet in mid-September. Opening overall stronger this morning the Kiwi is currently buying 80.10 US Cents.
We expect a range today of 0.7960 – 0.8060
Great British Pound:
The upward trend of the Great British Pound remained in-tact on Friday with previous resistance levels around the 1.5750 against the Greenback now acting as support for the Sterling. After markets were generally satisfied by Ben Bernanke’s willingness to kick-start a struggling US Economy UK Prime Minister David Cameron re-iterated that his government will continue with its deficit-cutting measures commentating that the British economy remains on the hard road to recovery. With the BOE also meeting later this week the next resistance level is likely to kick in around the 1.60 handle. Meanwhile this morning the Sterling opens a full cent stronger against both the Aussie (1.5430) and the Kiwi (1.9520).
We expect a range today of 1.5400 – 1.5500
Stimulus obsessed markets got a taste of what they wanted overnight Friday when Federal Reserve Chairman Ben Bernanke commented on his grave concerns over the state of the US Economy. Pointing towards tepid growth and a stubborn labour market investor’s attention is now likely to turn to the Central Banks meeting in a little less than two weeks time where it’s hoped a new array of stimulus measures will be introduced. Emphasising how much of a short memory investors can have at times despite Bernanke’s extremely down-beat assessment, markets closed Friday overall higher off the back of his pledge for further liquidity. Meanwhile jumping across to Europe poor data has been largely ignored as the Region’s unemployment rate remains stagnant at a record Euro-area high of 11.3 percent as the shared unit rallied from an earlier low of 1.2492 to where we open this morning at 1.2573 against its US Counterpart. Whilst the Greenback came off slightly against the Japanese Yen opening at 78.310, ECB President Mario Draghi’s comments are likely to be closely watched this evening in Brussels whilst volumes are expected to be lower over the coming 24 hours as the US remains closed due to the Labour Day public holiday
NZD: Overseas trade Index
Capital spending q/y
GBP: Manufacturing PMI
Italian Manufacturing PMI, Final Manufacturing PMI,