:: Australian Dollar: The Aussie dollar remained relatively range bound on Friday bouncing between 0.8650 and 0.8700 for the majority of the Asian session. Despite some modest upgrades to GDP and CPI forecasts from the RBA in its quarterly statement on monetary policy the market looked to offshore news for direction. In what was a volatile end to the week the AUD traded to a high around 0.8710 ahead of the U.S employment report before dropping rapidly to a low of 0.8580 following a disappointing non-farm payroll result (see majors report below). Speculation that the ECB would step in to bail out Greece and the impending Group of seven (G7) meeting over the weekend triggered a late bounce in the Aussie dollar to finish the week around 0.8620. In early Monday morning trade the Aussie dollar gapped higher to trade back above the 87 cent handle following Greece supportive comments from the G7 and speculation that a more detailed plan will eventuate over the course of the week ahead. Also adding fuel to the rise was the announcement that Australian coal exporter Resourcehouse finalised a 60 billion USD; 20 year export deal with China, one of Australia's largest ever export contracts.
- We expect a range today in the AUD/USD rate of 0.8775 to 0.8650
:: Great Britain Pound: The Pound Sterling gained some ground against the Greenback during Friday's London session following higher than expected Producer Price data as measured by the PPI Index. Input prices increased by 2% in January taking the annual rate to 8.4% whilst Output prices also rose during the same month. GBP/USD ran into some resistance around 1.5750 however and subsequently collapsed to a low near 1.5550 following a surge in demand for the Greenback against the Euro and GBP. This morning sees the Pound open relatively unchanged against the Greenback but substantially weaker against the Aussie dollar at 1.7950.
- We expect a range today in the GBP/AUD rate of 1.7880 to 1.8050
:: New Zealand Dollar: The Kiwi held on to support at 0.6850 during Friday's European session, rallying to a high of 0.6930 heading into the U.S employment report. An unexpected increase in jobless claims out of the non-farm sector put a dent in the markets confidence and as a consequence the NZD/USD sold off quickly to a low near 68 cents. After closing in New York around 0.6835 on Friday the Kiwi opens higher this morning on the back of positive sentiment surrounding Europe and a rise in the Aussie dollar, exchanging above 69 cents at the time of writing.
- We expect a range today in the NZD/USD rate of 0.6800 to 0.6925
:: Majors: German Industrial Production data disappointed the market on Friday falling by 2.6% in December against expectations of a modest 0.6% increase triggering a slide in EUR/USD from 1.3720 to a London low around 1.3650. Heading into the all important U.S Payroll data and the weekends G7 meeting European speculators squared short Euro positions taking EUR/USD back above 1.3700 to retest resistance ahead of 1.3750. Risk appetite dissipated following the announcement that 20k (Vs +15k forecasts) jobs were lost in the non-farm sector during the month of January. The employment report however was quite mixed with an upward revision in November data, a downward revision for December and a decrease in unemployment for January. The headline unemployment rate beat expectations to fall below 10% to 9.7%, its lowest level since August adding support to the Greenback. The big dollar finished the week's trade at 1.3605 and 89.25 against the Euro and Yen respectively with the meeting of the G7 finance ministers capturing some headlines this morning. Of particular interest for currency markets were comments about Greece, a push for countries to adopt a more flexible exchange rate policy, rhetoric that appears to be aimed towards putting pressure on the Chinese to allow the Yuan to appreciate, and a pledge to persist with economic stimulus measures.
:: Data Releases:
- AUD: No Data Expected
- NZD: QV Jan House Prices
- USD: No Data Expected
- GBP: RICS House Price Balance & BRC Retail Sales
- EUR: Dec German Retail Sales
- JPY: Dec Current Account