Leading to a notable drop in the Australian dollar yesterday growth in China’s manufacturing sector slumped in February. Falling from an opening level of 1.0317 against its US Counterpart mid afternoon lows of 1.0261 were witnessed following the release of the HSBC flash purchasing managers index which slipped to 50.4, against an expected reading of 52.2, the lowest reading in four months. Whilst many economists argue that the underlying strength in the Chinese economy remains intact, it’s the slump in exports which remain a concern given that businesses rely heavily upon the demand from US and European markets to drive production. Opening this morning lower at a rate 1.0290 a string of data release from the world’s largest economy will be critical in determining short-term direction.
We expect a range today of 1.0260 – 1.0315
New Zealand Dollar
The New Zealand dollar has done very well to maintain its recent ranges against its US Counterpart given the poor Chinese HSBC Flash PMI reading yesterday. Despite declines across global equity markets amid renewed concerns over political instabilities in Italy, the New Zealand dollar has traded within a 24 hour range of (0.8345 – 0.8416), opening this morning overall unchanged against the Greenback as it currently buys 83.68 US Cents. On the outlook today Inflationary expectations are scheduled to be released at 1:00pm AEST with above average price pressures likely to play a supporting role for the nation’s currency
We expect a range today of 0.8350 – 0.8400
Great British Pound:
The Great British Pound has re-captured some the ground lost late on Friday evening following Moody’s decision to downgrade UK debt to AA1 from the coveted AAA Rating. Bouncing from earlier lows of 1.5067 the Sterling is looking a lot healthier this morning, currently trading at a rate of 1.5183. Given the broad sell off in the Euro overnight, the Sterling benefitted from being the best of a bad bunch as investors moved away from the shared unit. Opening stronger against both the Australian dollar (1.4753) and the New Zealand dollar (1.8132) the downside risk for the Sterling still remains distinct.
We expect a range today of 1.4720 – 1.4780
US Stocks have declined overnight after investors became concerned over the prospects of a stable government in Italy. Given the lack of data released globally speculation has mounted that Italy may be left with a hung parliament as partial election results offer minimal clarity. With renewed turmoil throughout Europe well and truly back on the cards the Shared unit has crumbled overnight dropping from an earlier high of 1.3317 against its US Counterpart to open this morning well below this level at 1.3089. In other notable movements the USD/JPY also fell and fell hard overnight after investors shortened bets that Prime Minister Shinzo Abe will nominate a BOJ Chief who favours aggressive stimulus. Overall well received by markets incoming Chief Haruhiko Kuroda is a well known opponent to deflation increasing the prospects of further stimulus. After opening yesterday at a rate of 93.09 the USD/JPY is lower this morning at 91.39. On the outlook this week US Fed Reserve Chairman Ben Bernanke is expected to give his semi annual testimony to the House Financial Services Committee with his words likely to be closely monitored for any further clues on when the Fed may put an end to current round of stimulus.
RBA Assist Gov Debelle Speaks
NZD: Inflation Expectations m/m
No data today
GBP: MPC Member Bean Speaks, CBI Realised sales
No data today
CB Consumer Confidence, Fed Chairman Bernanke Testifies, New Home Sales, Richmond Manufacturing Index
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