:: Australian Dollar: The release of the RBA board minutes saw a fairly muted reaction initially on the AUD/USD as it drifted around the 0.8890 level before popping through the 89 cents in Asian afternoon trade. Despite a compelling argument based on local economic fundamental data the central bank resisted the urge to raise the official cash rate stating uncertainty over the outlook in Europe and China as the main reasons to pause in February. Despite this the market continued to price in more rate rises later in the year and with commodity prices, in particular gold and crude oil futures, gaining almost 2% the AUD/USD roared higher to open this morning on its highs marginally above the psychological 90 cent barrier.
- We expect a range today in the AUD/USD rate of 0.8950 to 0.9050
:: Great Britain Pound: Last night the UK recorded it highest annual CPI since 2008 as it emerges from its worst recession in decades. Annual headline CPI rose 3.5% in line with expectations and British retail prices also grew in line with market expectations at 3.7%. Although the gains are expected to be temporary as the BOE reinforced its commitment to keep inflation at the Government's target rate of 2% and would continue to monitor the appropriate scale of the asset purchase program and further purchases would be made should the outlook warrant them. The Pound rallied from its overnight low of almost 1.5625 in US trade testing 1.58 USD several times after faster-than-estimated growth in New York manufacturing and positive comments out of Europe spurred optimism the global economic recovery will be sustained, increasing risk appetite. The Sterling opens near its high at 1.5785 USD but lower against the AUD at 1.75.
- We expect a range today in the GBP/AUD rate of 1.7450 to 1.7575
:: New Zealand Dollar: The Kiwi was un-inspiring in Asia reaching a low of about 0.6960 USD as markets waited for the EU's assessment on the great Greek tragedy. EU officials pledged to help Greece close it s deficit and impose deeper cuts with the Greek finance minister stating that it was ahead of its scheduled deficit reduction targets. The Kiwi opened offshore trade at 0.7045, around 1.5% above the Asian low of 0.6960 against the US dollar rising as commodities rallied on the back of stronger than expected US data and optimism surrounding Europe. Today the Kiwi opens on its highs near 0.7075 USD with further direction to come on the back of risk sentiment.
- We expect a range today in the NZD/USD rate of 0.7020 to 0.7115
:: Majors: The Euro traded sideways during London trade hovering between 1.3635 and 1.3675 for the majority of the session with ZEW sentiment survey results having little effect on the currencies. As the market awaited rhetoric from EU officials and the return of U.S investors from the long weekend volatility was low. The head of Euro-Zone finance ministers Jean-Claude Juncker said it was absurd the IMF would provide financial assistance to Greece and that they would, and have, provided technical assistance. The comments did give the market some confidence that financial aid may not be required boosting the Euro against the Greenback from 1.3650 to an overnight high of 1.3775. Adding to the positive sentiment was Greece's own finance minister who said the nation was ahead of its deficit reduction targets. Better than expected U.S economic data and big gains in commodity prices during North American trade also helped boost risk appetite triggering gains in both EUR/USD and USD/JPY with the latter peaking at 90.50.
:: Data Releases:
- AUD: Dec Westpac Leading Index
- NZD: No data expected today
- USD: FOMC Minutes, Jan Housing Starts, Jan Building Permits & Jan Industrial Production
- GBP: BOE Minutes, Jan Jobless Claims & Dec 3mth ILO Unemployment Rate
- EUR: Dec Trade Balance & Dec Construction Output
- JPY: Dec Tertiary Industry Index & Jan Machine Tool Orders