Australian Dollar: As expected the falls continued from where we opened yesterday as equities and commodities dragged the Aussie lower and the US dollar strengthened although the decline was somewhat subdued bottoming out around 1.0230. Heading into Europe some poor data actually helped boost the Aussie with some flows out of the Euro into AUD which pulled AUD/EUR back above 0.7750 and in turn AUD/USD back towards 1.0260. The rest of the night saw us trade between these previously established ranges and we bounced between 1.0230 and 1.0260 as markets continue to focus on the Fed minutes released early yesterday morning. There is very little today and tonight in terms of traditional data releases although RBA Governor Stevens will be testifying before a House of Representatives economics committee today, meanwhile we find AUD/USD currently trading at 1.0245.
We expect a range today of 1.0220– 1.0295
New Zealand Dollar: The fact that we find ourselves not far off where we opened yesterday indicates the Kiwi has managed to hold up quite well and looks likely to stay above the 0.83 psychological level for the remainder of the week. Two key negative events in the form of dovish comments from Governor Wheeler and hawkish comments from the US Fed on Wednesday saw a strong a selloff in the Kiwi prior to yesterday’s open and with equities falling hard it appeared the selloff could have continued through to 0.83 during our session. However this didn’t eventuate with strong support found around 0.8340 saw us hold out until further falls in Euro helped drag us back up to eventually trade close to 0.8360. Mixed data out of the US and further falls in equities sees us back at 0.8340 this morning but with only tier two data out today we may see some sideways trading for the remainder of the week.
We expect a range today of 0.8315 – 0.8375
Great British Pound: The pound has managed to rebound somewhat from yesterday’s lows as a weakening Euro and a falling EUR/GBP fed through to several other pound crosses and the cable itself. The pound managed to approach 1.5270 against its US counterpart as a report showed UK public sector net borrowing posted a deficit of 9.9b versus expectations of an 11.2b deficit, while PMI manufacturing and services in Europe fell more than expected. Despite this the pound is still looking vulnerable having reached a low close to 1.5150 during Asian trade yesterday which has not been seen since July 2010. With no local data tonight, the pound will likely be influenced by movements in the EUR/GBP again with German GDP out tonight, meanwhile we open this morning at 1.5250. On the pacific cross the pound is currently higher against both the Aussie (1.4880) and the Kiwi (1.8275)
We expect a range today of 1.4820 – 1.4930
Majors: The selloff that began just before our open yesterday was continued through yesterday and into last night with equities, commodities and all higher-yielding currencies all falling. The shock from the FOMC minutes was added to by some poor data releases out of Europe and the US, sending EUR/USD below 1.32 for the first time since early January. Out of Europe last night we had the release of worse than expected PMI manufacturing and PMI Services data, indicating that the economy is still contracting and the recovery may be faltering. PMI manufacturing came in lower at 47.8 versus expectations of 48.5 and PMI services also came in lower at 47.3 versus expectations of 49. Over in the US we had CPI data which came in on expectations at 1.6%, although there were some positives in components of the reading. The big disappointment from the US though, was the US Philadelphia Fed factory index which dropped -5.8 to -12.5 this month and indicates a contraction for manufacturing in the US. Off the back of this the USD/JPY fell below 93 and USD initially dropped against several other currencies but with equities continuing to fall the pullback in the Dollar didn’t last and we find EUR/USD back its lows around 1.3180.
AUD: RBA Governor Stevens speaks
NZD: Credit card spending
JPY: No data today
GBP: No data today
EUR: German GDP, German IFO
USD: Fed member Fisher speaks