Australian Dollar: The last 24 hours for the Aussie have been fairly quiet with the currency held in a fairly tight range and opening close to where we left it. The focus yesterday was mostly on the follow up from the G20, although we also had some minor local data in the form of New car sales which came in lower with a fall of -2.2% for the month of January. This saw the Aussie initially drift towards the day’s low just under 1.0280 but it wasn’t enough see any serious movements and we were soon trading back up towards 1.0300. The AUD opens this morning little changed from this level currently at 1.0295 with the main focus today being the RBA minutes from their meeting this month. It is likely the minutes will deliver a fairly neutral stance although investors will look for any mention of indicators that will push them towards an easing bias in the future. Markets continue to focus on the falling AUD/NZD with last week’s low of 1.2141 a possibility if the RBA’s minutes are more dovish than expected.
We expect a range today of 1.0235 – 1.0325
New Zealand Dollar: The falls that began Friday night continued yesterday as issues in Europe saw risk correlated assets pull back in early European trade. There are concerns regarding the upcoming Italian elections and the likelihood of getting a result, and in general markets to not like uncertainty. With the US on holiday the downside was somewhat limited around the 0.8425 level and we were soon drifting back up to eventually make up most of the lost ground. We now find the NZD/USD basically where it was at the open yesterday; just above 0.8450. Locally today is looking like another quiet day, however we may see some movement from the crosses, particularly AUD/NZD and NZD/JPY with both currencies looking under pressure against the Kiwi.
We expect a range today of 0.8420 – 0.8495
Great British Pound:
The pound remains under pressure having given up 1.5500 for the first time since August last year after Martin Weale, a member of the BoE, said that the fall in pound should do the economy good. In a continuation of the theme that began last week with the G7 and G20, currencies have been again been a central topic when it comes to monetary policy and Weale, in his speech at an economics summit, said that a weaker pound should help rebalance the UK economy and help drive up exports. The fall in the pound was limited however, with North American markets closed and some support found in better than expected Rightmove housing data. This morning we find GBP/USD at 1.5460 while it is also weaker against the Aussie (1.5010) and the Kiwi (1.8290). We expect a range today of 1.4980– 1.5040
Majors: With the major North American markets out on public holiday it seemed everyone else was happy to sit back and take a break too as the major currencies were mostly held within tight ranges. The main theme remained talking about “not talking about currency manipulation”. There were several leaders quoted in the follow up from Saturday’s G20 meeting, in particular we had Draghi, in a speech to Euro law makers, stating that while the strength in the Euro could become a concern for inflation, it would not be dealt with in isolation but rather in regards to price stability as a whole. He also stated that he felt the Euro was currently around its long-term average. Meanwhile Prime Minister Abe of Japan commented that the new inflation targets are already starting to show results but that he will not be commenting on the currency, stating that they have no particular levels in mind for the Yen. What this all looks like now is that policy makers will continue doing what they were doing prior to the G7 and G20, they will just refrain from making comments that directly link the policies to their currencies. As earlier stated the FX markets reacted little to anything overnight with EUR/USD trading mostly between 1.3330 and 1.3365, while USD/JPY spent most of its time on either side of 94. Today’s focus is likely to be on BOJ minutes before the German ZEW survey tonight.
AUD: RBA minutes
NZD: No data today
JPY: BOJ minutes, Leading index
GBP: No data today
EUR: ZEW survey, Construction output
USD: Mortgage delinquencies