The Australian dollar pointed higher on Friday following a busy week of both local and offshore happenings. Despite flirting with sub 1.02 levels against its US Counterpart earlier in the week , promises of an ECB bond-buying plan mixed with a fresh bout of poor labour market figures out of the US on Friday have again put another round of quantitative easing firmly on the agenda when the US Federal Reserve meet again this Thursday. After earlier starting the day at a rate of 1.0290, the higher yielding asset remained well purchased briefly touching overnight highs of 1.0400. Meanwhile this morning with markets hearing news of weaker than expected Industrial Production results out of China, there remains a general consensus that officials will need to add further stimulus and increase infrastructure spending to ensure full-year growth doesn’t slump to its lowest level in over two decades. In what’s shaping as another busy week for markets the Australian dollar opens around 80 basis points stronger at 1.0372 this morning
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 1.0320 -1.0400
New Zealand Dollar
Adding to the feeling that further short-term relief is on its way from the US Federal Reserve in the form of QE3, investors were again left disappointed on Friday given the worlds’ largest economy added a mere 96 000 new jobs in August, well below the expected reading of around 125 000. Adding to speculation the market is about to receive another liquidity boost, the New Zealand dollar headed north for much of Friday’s session rallying to an overnight high of 0.8124 against its US Counterpart. Finding notable fresh ground above the psychological 80 US Cents mark last week, the move higher is made even more remarkable given the steep decline witnessed across commodity markets as well as underlying concerns that China’s growth is also slowing. Looking ahead this week given a string of data releases expected out of China, short-term support is likely to kick in around the 0.8070 mark, as the kiwi opens stronger this morning currently buying 81.06 US Cents.
We expect a range today of 0.8060 – 0.8140
Great British Pound:
Manufacturing Production, PPI input and Industrial production figures for the month of August all came in above expectation on Friday helping boost demand for the Great British Pound. With the Greenback likely to remain low in the short-term given hopes of further stimulus out of the US Federal Reserve the Sterling moved higher against its US Counterpart reaching a late session top of 1.6033. With a very quite economic calendar over the coming days the Sterling is likely to remain relatively subdued ahead of the German Constitutional high court decision Wednesday. Meanwhile on the cross-rates this morning the Sterling opens well down against both the Aussie (1.5410) and the Kiwi (1.9697)
We expect a range today of 1.5390 – 1.5490
Markets continued to operate on a awkward rational on Friday where the labour market within the world’s largest economy continued to show signs of underlying weakness, hence boosting bets of further stimulus and hence triggering the underlying rally. With the US economy adding 96 000 workers in August well down from July’s increase of 146 000 such a poor result brings into further perspective Ben S Bernanke’s comments of last week that the underlying high level of unemployment remains of grave concern. Following the short-term relief markets received through the ECB’s bond-buying announcement last week, fingers will be crossed in anticipation that the US Federal will also join the party and throw even more cheap money at the market when they meet this coming Thursday. With the German Constitutional high court also expected to announce their decision on joint liability of European debt this coming Wednesday there lies some choppy waters ahead for not only the shared unit but also the Greenback. Meanwhile this morning having set sail for levels in excess of the 1.30 mark against its US Counterpart the Euro opens close to its highest level since May currently swapping hands at 1.2805.
Home Loans m/m
NZD: Manufacturing Sales q/q
GBP: No Data Today
French Industrial Production m/m, Sentix Investor Confidence
No Data Today
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