:: Australian Dollar: A higher than expected inflation gauge reading, solid New Home Sales and an increase in company operating profits all gave the Aussie dollar a boost in local trade yesterday as it recovered from an early morning dip to 0.8425 to push marginally above the 85 cent handle. The AUD/USD entered offshore exchange at 0.8470 and continued lower briefly trading below 84 cents before bouncing back to open this morning back at 0.8470. Weaker than expected European data and comments from the U.S Federal Reserve bank weighed on the Aussie dollar ahead of today’s RBA interest rate announcement where the market is expecting the official cash rate to remain unchanged at 4.5%. Also scheduled for release today is the volatile yet closely monitored Retail Sales with analysts forecasting a slight increase from 0.3% to 0.4% in April.
- We expect a range today in the AUD/USD rate of 0.8400 to 0.8520
:: Great Britain Pound: With no economic data released and a Bank Holiday in the U.K the Pound Sterling was relatively stable overnight grinding up from 1.4480 to open this morning at 1.4530 against the Greenback. The U.S dollar weakened across the board following comments from Fed official Evans stating that the timing of any interest rate rises are likely to be pushed back following uncertainty surrounding the situation in Europe. The GBP/AUD cross rate pulled back from its overnight highs around 1.7300 and opens this morning at 1.7150 ahead of what is likely to be a volatile Asian trading day with several key Australian data releases the highlight of which is the RBA interest rate decision.
- We expect a range today in the GBP/AUD rate of 1.7075 to 1.7275
:: New Zealand Dollar: The Kiwi opened the week on a negative note yesterday pressing against 0.6750 USD following a less than impressive May NBNZ Business Confidence Survey. After grinding out some gains in Asia and peaking just shy of 0.6850 it was a somewhat volatile offshore session. Euro-zone inflation estimates came in just below expectations initially dragging the Euro and Kiwi lower however renewed Greenback selling late in the session triggered a recovery in NZD/USD from 0.6740 to this morning’s open at 68 cents. The AUD/NZD cross rate remains relatively stable exchanging at 1.2420 this morning however we do expect some volatility to emerge today on the back of key Australian data releases.
- We expect a range today in the NZD/USD rate of 0.6750 to 0.6850
:: Majors: USD/JPY rallied from a low of 90.90 in Asia yesterday to enter offshore trade on its highs around 91.60 following some disappointing Japanese economic data and a positive day on equity markets. Housing starts and Construction orders both came in well below expectations dampening enthusiasm for a recovery in the economy and weakening the currency. With the U.S markets closed for the Memorial Day holiday it was a relatively subdued offshore session with the majority of the moves coming during the European time-zone on the back of Euro-zone data. The May inflation estimate increased from 1.5% to 1.6% but was just short of analyst forecasts of a rise to 1.7% whilst as to be expected confidence on the European economy waned. The news saw EUR/USD dip to 1.2265 before bouncing back late in the session to open this morning hovering around 1.2300 whilst USD/JPY also gave back some of its Asian gains to open at 91.20. U.S Federal Reserve Bank member and President of the Bank of Chicago Charles Evans said expectations of a rate rise in America are likely to be “extended just a little bit” due to the European debt crisis and that it “adds uncertainty to the economic outlook”.
:: Data Releases:
AUD: RBA Announcement, Apr Retail Sales, Apr Building Approvals & May AiG Performance of Manufacturing Index NZD: No Data Expected Today USD: May ISM Manufacturing, May ISM Prices Paid & Apr Construction Spending GBP: May Manufacturing PMI EUR: Apr Euro-Zone Employment, Apr Manufacturing PMI & Apr German Retail Sales JPY: May Vehicle Sales