Following Governor Glenn Stevens’s dovish comments late last week that the RBA has considerable scope to lower borrowing costs, added emphasis has now been placed on the release of minutes from the Central Banks most recent meeting, which are due out this morning. With interest rates tracking back towards their lowest level in more than 50 years (3 percent), Octobers adjustment marked the fifth downward revision since November last year. In what has been a uneventful 24 hour period the Australian dollar still appears heavy as it approaches the 1.03 level with highs witnessed overnight of 1.0254 against its US Counterpart. Having also bounced nicely from three months lows of 1.0150 early last week the European Summit due to commence Thursday as well as RBA minutes today remain crucial for the higher yielding asset. Meanwhile this morning the Australian dollar opens virtually unchanged at 1.0254.
RBA keeps cash rate at 3 percent
We expect a range today of 1.0200 – 1.0300
New Zealand Dollar
Demand for the New Zealand dollar received a boost overnight after receiving positive leads out of the US. Following an uninspiring local session in which the Kiwi traded close to the 0.8150 mark against its US Counterpart the higher yielding asset was in strong demand as a result of better than expected US Retail Sales as well as improved corporate earnings on Wall Street. Reaching highs of 0.8186, data in New Zealand today is expected to show the consumer price index rose at an annual pace of 1.1 percent with any reading around this figures likely to trigger fresh speculation of a rate cut from the RBNZ. Meanwhile on the currency front, the overall performance of the Kiwi in the early parts of this week has been solid as it opens stronger this morning currently buying 81.86 US Cents.
We expect a range today of 0.8150 – 0.8220
Great British Pound:
Positive trade numbers in China, better than expected US fundamentals as well improved corporate earnings have not been enough to push the Great British Pound into positive territory against its US Counterpart. Despite the US Currency remaining flat investors have seemingly gone into hiding instead choosing to sit on the sidelines ahead of BOE minutes on Wednesday and the European Summit Thursday. Reaching highs of 1.6079 against the Greenback the Sterling opens close to these levels this morning at 1.6070. Meanwhile on the cross rates the Sterling opens at very similar level to where we left it against both the Aussie (1.5667) and the Kiwi (1.9625)
We expect a range today of 1.5630 – 1.5700
Global stocks rallied overnight after earnings from Citigroup comfortably beat expectation. Further improving global risk sentiment and triggering a slight move away from the Greenback US Retail Sales grew at a pace 1.1 percent in September, comfortably beating the forecasted figure of 0.7. Reflecting a broad-based improvement in consumer household spending such figures remain a positive for the world’s largest economy which relies so heavily upon domestic consumption to drive growth. Whilst currency markets have been extremely quiet in the early parts of this week the focus of investors will remain heavily on the ever evolving European debt crisis. Given volatilities are expected to increase on Thursday leading into the European Summit, talks of a Spanish bailout, austerity conditions in Greece as well as talks of a deeper monetary union will be high on the agenda. In overnight action the Euro traded between a low of 1.2890 and a high of 1.2970 against its US Counterpart as the Shared unit predictably opens flat this morning at a rate of 1.2954.
Monetary Policy Meeting Minutes
NZD: CPI q/q
No data today
GBP: CPI y/y, PPI Input m/m, RPI y/y
German ZEW Economic Statement
Core CPI m/m
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