The Australian dollar sits below 1.0200 this morning after softer than expected local GDP figures for the June quarter prompted a few holders of AUD/USD to sell. Touching lows below 1.0170, the local unit remains under a cloud of pressure as iron ore prices continue to remain soft and the slowdown in global growth continues to make the headlines; concern for the outlook of the Australian economy has crossed a more than a few minds. Cautiously moving back to 1.0190, this is where we open this morning and although some risk-positive news is expected from the ECB tonight, it may or may not be enough to give the Aussie dollar the lift it is looking for. Also falling on the crosses, AUD/EUR has moved down towards 0.8085 and AUD/GBP has also shed further value to 0.6410. Unemployment figures today and trade data tomorrow mean the Aussie will still likely be facing some volatility into the end of the week; its next level of support against the Greenback lies just below 1.0100.
A man smiles as he talks on a mobile phone in front of an electronic monitor displaying share prices outside a brokerage in Tokyo.
We expect a range today of 1.0120 – 1.0240
New Zealand Dollar
The New Zealand dollar has traded rather conservatively over the past 24 hours, consolidating around 0.7950 after being pulled lower through association with a softer Asian region. Lows just below 0.7920 were tested during European hours, however words of confidence from ECB bankers has instilled a degree of support in risk-sensitive currencies. Focus for the Kiwi will remain offshore for the remainder of the week, with some key data from Australia likely to set the tone for the Australasian region, as well as tonight’s ECB meeting and Friday’s US employment data. Weakness in the Aussie following softer than expected GDP sees the New Zealand dollar higher this morning on the cross and the pair currently trades at 1.2814 (0.7804).
We expect a range today of 0.7900 – 0.7990
Great British Pound
Sterling posted an impressive one cent rally against the US Dollar on Wednesday, touching a three and a half month high near 1.5930 after data from the country’s services sector suggested the recession may be easing. Speculation the Bank of England will refrain from adding additional stimulus measures when it meets for it monthly policy meeting tonight helped the currency strengthen against most of its major trading partners; although understandable euro strength has meant a softening against the single currency. GBP/USD is higher this morning at 1.5910, GBP/EUR lower at 1.2615; however the antipodeans have faltered with GBP/AUD just below 1.5600 and GBP/NZD just shy of 2.0000.
We expect a range today of 1.5520 – 1.5660
The euro has risen back above 1.26 overnight and currently trades directly on this handle after two European Central Bank officials said President Mario Draghi will announce an unlimited, sterilized bond buying program to soothe the region’s credit markets. “Unlimited” suggests they will exercise the full power of their balance sheet and continue to intervene until the desired result is achieved. “Sterilised” implies they will ensure their bond purchases will not interfere with underlying money supply, thus limiting the devaluation of the euro. Anticipation is now running rampant ahead of this evening’s ECB meeting, however details may possibly remain sketchy until the German Constitutional Court hands down its ruling on the legality of the European Stability Mechanism (ESM) on September 12. Trade in other currencies has been relatively quiet as markets also await Friday’s non-farm payroll data, a key indicator to the health of the US economy. The Greenback, despite being lower against the euro dollar is relatively stable against the Japanese Yen and sits this morning just below 78.40.
AUD: Employment Change; Unemployment Rate
NZD: No data due for release
JPY: No data due for release
GBP: Official Bank Rate; Asset Purchase Facility; MPC Rate Statement; Halifax HPI m/m
EUR: Minimum Bid Rate; ECB Press Conference; German Factory Orders m/m
USD: ADP Non-Farm Employment Change; ISM Non-Manufacturing PMI; Unemployment Claims
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