The Australian dollar steamed ahead of its US Counterpart overnight with investors speculating that the US Federal Reserve will announce further stimulus measures when they begin a two day meeting this evening. Well supported by a very weak Greenback which fell across the board, commodity prices also came to life further helping the cause of the riskier-backed asset. Despite the Aussie dollar which has traded as high as 1.0448 over the past 24 hours the downside risks are certainly prevalent should investors not receive the degree of stimulus already priced in at current levels. Looking ahead today in the absence of any major data releases locally it’s anticipated the Australian dollar will remain range bound ahead of key decisions out of both Germany and the US. Meanwhile this morning is Aussie Dollar opens a full cent stronger at 1.0431.
China, and the Euro-zone's GDP growth forecasts have been reduced to 8.2% (prior +8.5%) and -0.1% (prior 0.2%) respectively; whereas Germany, France and the US results were amended upwards.
We expect a range today of 1.0380 – 1.0460
New Zealand Dollar
In a bullish session for the New Zealand Dollar yesterday investors continued to add risk ahead of the Federal Reserve’s two day Policy meeting. Despite concerns still lingering over global growth and a potential slowdown in China the Kiwi has benefitted from a continually weak Greenback which was dealt a further blow overnight after Rating’s Agency Moody’s warned it may cut the Credit Rating of the US one notch to Aa1 should the Federal Government fail to reduce their ballooning level of debt as a percent of GDP. With speculation dominating markets that stimulus is on its way the New Zealand dollar pushed its way higher overnight, touching the highest level seen against its US Counterpart in over one month. Topping out around the 81.94 US Cents mark the kiwi opens this morning noticeably stronger currently buying 81.71 US Cents.
We expect a range today of 0.8130 – 0.8200
Great British Pound:
In figures released yesterday Britain’s trade deficit shrank in July as exports soared, adding to signs Britain’s economy may of turned the corner. Following the announcement the Great British Pound soared higher, rising to its strongest level in almost four months against its US Counterpart. Whilst short-term direction is likely to be strongly dictated by the German High Court decision expected to be announced this evening the Sterling has certainly covered some ground over the past 24 hours reaching highs of 1.6067 against the Greenback. Despite its strength against a broadly weaker Greenback the Sterling has been unable to keep pace with both the Aussie (1.5400) and the Kiwi (1.9660) with the cross rates opening well below levels seen yesterday
We expect a range today of 1.5360 – 1.5440
The markets obsession with stimulus continued in overnight trade, dragging with it the US Dollar which has weakened against all 16 of its most traded counterparties. Given the expectation that the US Federal Reserve will provide a fresh bout of Stimulus in the form of Quantitative Easing Round 3 we pair this with reduced headwinds in Europe as well as the fiscal concerns surrounding debt levels throughout the world’s largest economy and it’s no surprise to see the Greenback feeling the pinch. Helping the Euro in comparison the shared unit finds itself pushing towards four-month highs after reaching an overnight peak of 1.2870 against its US Counterpart. Whilst the 17-nation currency could in fact push higher towards the 1.30 mark should opening levels above 1.2850 hold much will depend on the German Constitution Court Ruling expected out this evening.
Westpac Consumer Sentiment, Housing Starts q/q
NZD: No Data today
Core Machinery Orders y/y
GBP: Claimant Count Change, Unemployment Rate, MPC Member Broadbent Speaks
German Constitutional Court Ruling, Italian Industrial Production m/m, Industrial Production
Import Prices m/m
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