The US dollar yet again was the downside in currency trading overnight with the other major’s currencies taking solid gains. The catalyst for the Greenback selling was this morning’s FOMC meeting minutes, which highlighted a still slow economic recovery and pairing of interest rate rise expectation due to the recent softer data. Inflation remains an ongoing concern in addition which could hold back any rate rises. The Pound and Euro had the largest gains both up around 70 pips, with the Euros larger jump due to yesterday’s gains being wound back earlier overnight. The Australia dollar traded up to 93.99 US cents, a 50 pip move, whilst the New Zealand dollar bettered that by jumping 65 pips to above 87.2 US cents.
Whilst the Australian dollar has had solid gains this week, it has been more to do with the weakness of the currencies its traded against. Today’s Unemployment numbers are likely to redress that pattern. There is still an upward bias to the Australian dollar, with the consensus for the rate to edge up to 6.1%, with around 7,000 new jobs created. The number is notoriously hard to predict due to the participation rate ongoing movements each month. Chinese Trade balance numbers follow at lunchtime, with a close to neutral number expected after last month’s surprise contraction.
The Pound has put on 2 cents versus the US dollar this week so far and it’s likely to remain in trading focus with the Bank of England to meet tonight. The rate will stay the same but the MPC Rate Statement will likely reflect on the UK economies sputtering recovery.
The Australian dollar burst above 93 US cents as the European session kicked off yesterday, putting on 50 pips on in quick time. It traded as high as 93.66 US cents during the US session and has only marginally retreated from that high. The Australians dollar’s gains versus the Greenback were close to the smallest with the Euro stripping 70 pips from the Greenback, whilst the Yen took 100 pips and Pound 140 pips. There was a net selling of the Greenback but several economic moves impacted the severity of each of the major currency gains. The Bank of Japan refrained from extra stimulus as their economic recovery continues, sparking solid demand for the Yen across the board, with the US dollar now down at 101.9 Yen.
Economic news was the key driver for the Pounds strong demand overnight with Manufacturing Production jumping up by 1%, it biggest increase in 5 months, and the first outperformance of UK data for a while. The Pound traded up to 1.6750 USD and has stayed within 5 pips of that mark for the last 8 hours. The Euro, like the Aussie just rode the tide of US dollar weakness and it was able to peak up at 1.38 USD but it did fall against the Yen, Pound and Australian dollar.
The strength of the Australian dollar will be tested this morning again after yesterday’s drop in business confidence we are met with Westpac Consumer Sentiment. It’s not likely to make a big dent with Home Loans data an hour later likely to be a bigger influence on AUD trading. From a US dollar perspective the focus will sit on the FOMC Meeting Minutes released early tomorrow morning.
The Australian dollar was in a slender trading band staying within a 30 pip range through the two overnight sessions. It peaked at 92.63 US cents during the European session before easing during the US opening hours and inching back to 92.45 US cents this morning. That sort of trading pattern was reflected across most of the major pairs with movements limited to that 30 pip mark overnight with key economic events close to market estimates. ADP Non-Farm Employment Change came in right on median estimates at 191,000 new jobs. The data did help swing US dollar demand for the hours following the release with the dollar holding gains versus the Pound, Euro and Yen through to this morning whilst the Aussie gained most of the ground back.
The Euro took the biggest hits against the other major currencies with Final Quarterly GDP being revised back to 0.2% from initial releases. The data showed the tenuous grip that the European region has to growth and triggered a change in sentiment for the Euro contributing to the 50 pips it shed against the Greenback.
Today’s Asian session sees the focus shift back to the Australian dollar with retail sales and trade balance data from Australia in the spotlight. After last month surprise jump above 1% month on month retail sales growth, expect it release to make the headline initial movement. Trade balance data needs to be broken down before its effect hits currency trading but expectations are for it to remain in surplus for a third straight month.
The question for tonight’s session will be what the ECB gives on guidance going forward. Last meeting communicated an unwillingness to ease but low inflation still remains a concern and the GDP revision would have raised some doubt. The uncertainty leading into the meeting will see that every word that ECB President Draghi says from the lectern is traded on, and after recent efforts of his to talk down the Euro currency that isn’t helping growth or inflation numbers.
US data the follows tonight includes Trade Balance, ISM Non-Manufacturing PMI and weekly Unemployment Claims. Market expectations for all three are for them to remain close to previous numbers, with currency market really just waiting for there for Non-Farm Employment Change tomorrow night as the major US dollar catalyst.
Overnight currency trading was volatile and also lacking rational technical and fundamental explanation. The Euro spiked off no economic data during the US session putting on 100 pips in 45 minutes before easing back by 40 pips and trading sideways for the last few hours. The Pound put on 60 pips in a similar movement but completely gave up its gains. The Australian and New Zealand dollar also reflect he move but in much smaller reference only jumping by 25 pips and quickly giving up the short spiked gains. The Euro had French Manufacturing & Services PMI return to expansion helping it above 1.38 USD briefly before German Manufacturing & Services PMI edged a little lower 30 minutes later helping shave back 50 pips before we got the dramatic move back up during the US session.
Chinese manufacturing PMI data contributed during a 50 pips fall of the Australian dollar versus the Greenback through yesterday’s Asian session from the market open. PMI dropped back into further into contraction but the Aussie found solid support all the way through the next two trading sessions recovering all ground and to peak at 91.49 US cents.
Today’s Asian session is void of any notable economic stimulus and that has been evident of currency trading through the last 4 hours where all the major pairs have traded sideways, although the Aussie dollar has firmed. We will likely see some response during the European session as market their review the Euro demand above the 1.38 USD handle after what was an eventful US session yesterday. Pound traders will be focused on the CPI read to see if it contracts for a 5 straight month likely taking the pressure any future rate moves.
The Australian dollar was one a few currencies that managed to have a positive gap on the US dollar this morning. It opened above 91 cents after continuing on from Friday’s solid support where it moved from 90.3 to close at 90.796 US cents. The Aussie also put on similar margin versus the Kiwi now back up at 1.065 NZD, hitting a ten day high after the RBNZ rates rise had swung support in the Kiwi dollar favour. The AUD demand didn’t arise from economic data but it remains the only major to be close to recouping all of the US dollar gains from the Fed FOMC forward guidance bounce last week. The GDP miss from Thursday from New Zealand has seen the Kiwi dollar make no ground up on the US dollar late last week and it only sits 30 pips above its traded low last week.
There was plenty of sanctions announced at the EU Summit for Russia but nothing definitive done to suggest that Putin would at all back down after the annexation of Crimea. The Euro briefly traded above 1.38 USD on the open this morning before easing 10 pips below this mark after it traded in 40 pip band from Friday morning to the finish of the week. Euro trading is likely to be more active this evening with Manufacturing PMI data from France, Germany and the whole Euro region.
The Australian dollar performance today is likely to be entirely governed by Chinese HSBC Flash Manufacturing PMI due for release at lunchtime. It is the only piece of economic data for the Asian session and is expected to improve marginally on last month but still in a contractionary phase.
The Australian dollar traded around the 91 US cent handle for the majority of trade overnight before the Federal Open Market Committee statement and press conference triggered broad-based US dollar support. The Australian dollar slumped on 1 cent as Federal Reserve Chairwoman Janet Yellen reaffirmed its current path of QE reduction and upgraded projections for forward guidance in light of their view of a strengthening US economy. A first interest rise in mid-2015 is predicted by Yellen herself with the target rate at 1% by the end of 2015. The Australian dollar drop was par for the night with the Euro, Pound and Yen all shedding close to the same mark versus the Greenback. If we look back through 2013 a theme of all Fed projections was an underestimate of the Unemployment rate and an underestimate of improvements in the inflation rate. The Fed alsohas officially dropped the 6.5% unemployment target of when it would start raising rates.
The Pound had a solid European session preceding the FOMC statement trading as high as 1.665 USD. Helping its support was that unemployment remained steady at 7.2% and jobless claims dropping by 34,600 month on month. An added boost was a rise in wage earnings as the Pound put on 60 pips through from the Asian session yesterday. It did then drop to lows of 1.6508 USD which made it one the largest drops for the night off the back of the FOMC USD strength but its has recovered 30 pips from that low this morning.
The Australia dollar has had some instant support this morning versus the Kiwi dollar with GDP from New Zealand coming in at 0.9% and a negative revision from last quarter fuelling Kiwi dollar selling. The Australian dollar has picked up about 40 pips to be up at 1.0582 NZD while the NZD approaches overnight lows of 85.30 USD.
Today’s Asian session is quiet on the economic data from with only the RBA Bulletin quarterly due but being made up of previous releases its unlikely to have a huge impact. Currency trading volatility is likely to be driven more by political and world news with limited releases on the cards for the remainder of the week.
The RBNZ pulled no punches this morning raising rates by 25 basis point to 2.75% which had been expected by the majority of the market but still sparked healthy support for the Kiwi Dollar. The Australian dollar lost about 50 pips post release but still quite hasn’t quite broken through January’s lows of 1.04915 NZD but only sits 60 pips above this mark. The Kiwi has edged past the 85 US cent mark for the second time this month and is trading just shy away from 6 months highs versus the Greenback, and it’s also made very solid gains against the Yen, Pound and Euro. With 9% of New Zealand GDP coming from tourism is will be interesting to the effect on that sector with the high value of the Kiwi dollar.
In overnight trading the US dollar was really unsupported in currency trading with the major crosses breaching key levels. The Euro is back above 1.39 USD for the first time in 17 months surging 60 pips through the two sessions overnight. Industrial Production was soft from the region but it did not abate the confidence for Euro demand. The Yen also managed to improve by around 30 pips through trading yesterday with the Pound trading at the same levels as 24 hours ago versus Greenback.
The Australian dollar has bounced from its consistent tumble from Friday after it had fallen 200 pips post non-farm payrolls. Overnight it benefited from the softer Greenback and surged 70 pips to be knocking again on the door on 90 US cents. The Australian dollar will continue to be in the spot light with Unemployment Rate due for release at 11.30am, with market expectations for the number to remain at 6%.
The beginning of the US session marked a sharp change is global risk sentiment with a shift that still has significant momentum. The US dollar and Japanese Yen were the major beneficiaries on the currency front as worries about China’s financial system saw commodities struggle. The Australian dollar was an obvious loser as a default exposure to China and our reliance on commodities has seen it give up 80 pips to hit 89.57 USD moments ago. The tumble versus the Yen was even more defined with 120 pips shed by the Aussie as it dropped down to 92.127 yen.
Whilst risk currencies such as the Aussie, Kiwi and Canadian dollar were all being sold off overnight the other major crosses traded with no close correlation to those movements. The Pound had a solid night after Manufacturing Production moved to 0.4% month on month and peaked at 1.6647 USD at the start of the US session whilst the Australian dollar dropped. The Euro also remained relatively well bid only easing about 20 pips through the US session.
Westpac Consumer Sentiment gauge continues to weaken dropping to a 10 month low which has added to the Australian dollar weakness today. Home Loans data up at 11.30am might give some respite but the overall risk off sentiment is likely to remain a factor today with little data on the horizon today to stimulate a risk play.
The Australian dollar was unable to mount any significant pressure on the Greenback overnight dropping to 90.125 US cents at the start of the US session and only advancing 10 pips through to its end this morning. The Australian dollar drop was driven Monday morning by the drop back of Chinese CPI to 2% year on year on Sunday and further compounded by a reduction in consumer and business loans in China. The Australian dollar has moved ahead of yesterday morning’s open to 93.14 Yen, with an up and down last 24 hours due in part to the safety play back to the Yen being contrasted with uninspiring Current Account and GDP data.
Tensions in Ukraine may be rising but the translation to Euro weakness has not occurred this week so far and it sits higher in the last 24 hours versus the US dollar, Yen and Pound. The traction gained from last week ECB meeting and Mario Draghi’s comments closing the door on stimulus compounded with solid Italian Industrial Production overnight helped the Euro peak at 83.50 Pence. It has managed to trade above yesterday open versus the US dollar and Yen but failed to match highs met before Friday nonfarm payroll high.
Trading this morning has continued on for the quieter US session with not much in the way of volatility across the majors. NAB Business Confidence data will keep the Australian dollar in focus and to see if the short term improvement in the data continues. Stronger Japanese data in 2014 is likely to render the Bank of Japan’s Monetary Policy Statement and Press Conference a non-event with market expectations to changes to the current policy being pushed back a little further in 2014.← Older posts