Australian Dollar: It has been a busy week across financial markets thus far with the Australian dollar edging towards multi-month lows overnight. Whilst ratings agency Standard & Poor’s reassured investors that Australia’s top sovereign grade was safe, risk has still stayed off the table over the past 24 hours with signs of instability across Europe keeping investors away from the higher yielding asset. Dropping to an overnight low of 1.0182 any further flare ups from the broader euro-area do threaten to push the Australian dollar even lower as we open this morning overall unchanged at a rate of 1.0238. Looking towards weeks end private capital expenditure figures which are due for release at 11:30am this morning are likely to play a key role in determining short-term direction with markets now implying there is only a one in three chance that the RBA will cut interest rates when they meet next week.
We expect a range today of 1.0210 -1.0270
New Zealand Dollar In figures released yesterday New Zealand’s Trade Balance widened in January as the value of exported goods fell by a full 10 percent. Raising concerns over the negative impact the prolonged drought has had on the dairy industry figures showed exports of milk powder, butter and cheese fell by staggering 16 percent when compared to the same period last year. Despite the wider than expected deficit the past 24 hours has been an overall positive period for the New Zealand dollar which has benefitted greatly from a strong rally across global equity markets as well improved data releases out of the US. Opening 40 basis stronger the New Zealand dollar currently buys 82.72 US Cents
We expect a range today of 0.8230 – 0.8300
Great British Pound: In line with original estimates, revised figures confirmed Britain’s economy shrunk by 0.3 percent in the final quarter of 2012. Accelerating concerns that the UK is headed for a third recession since 2008 investors will eagerly await the release of Chancellor George Osborne’s budget plans which are due to be announced in less than a month’s time. In what has been a tumultuous week for the Sterling, the Great British Pound has continued to consolidate against the Greenback opening a third of one cent stronger this morning at a rate of 1.5153. Meanwhile when compared against the Aussie (1.4801) and the Kiwi (1.8337) the Sterling opens overall unchanged.
We expect a range today of 1.4770 -1.4830
Majors: During a session in which the economic numbers were actually quite strong not only did Orders for US Durable goods jump in January by the most in a year, the sale of new US homes also comfortably beat expectation surging to the highest level since 2008. With global stocks rallying overnight the Federal Reserve Chairman Ben S Bernanke in response to questions from members of Congress stated that there is evidence to suggest real interest rates have risen, giving further indication that the world’s largest economy is starting to strengthen. Meanwhile in Europe overnight the euro rebounded from a seven week, rallying to a 24 hour high of 1.3139. Whilst opening this morning at a rate of 1.3125, signs of stress have already started to show as a consequence of the Political turmoil in Italy. With the nation set to go back to Polls, Italy sold 6.5 billion worth of five and ten year bonds at a sale overnight with underlying yields spiking from a January low of 4.17 percent to current levels of 4.83 percent, (Watch this space). Highlighting the long road to recovery for broader Europe, ECB President Mario Draghi signalled that The Central Bank has no intention of tightening monetary policy anytime soon, in a speech made in Munich yesterday.
AUD: HIA New Home Sales m/m, Private Capital Expenditure q/q, Private Sector Credit m/m
NZD: ANZ Business Confidence, Building Consents
JPY: Manufacturing PMI, Prelim Industrial Production m/m
GBP: GfK Consumer Confidence,
EUR: German Prelim CPI m/m, French Consumer Spending m/m, German Unemployment Change, CPI y/y, Current Account
USD: Prelim GDP q/q, Unemployment Claims, Chicago PMI, FOMC Member Raskin Speaks