The Australian Dollar opens around 20-30 point higher this morning when compared with 24 hours prior, as risk sentiment remains supported ahead of European meetings this week. Strengthening to near 1.0470 overnight, the Aussie has fallen back slightly although it remains comfortably above near-term support at 1.0400/20. Starting today at 1.0440, the RBA minutes will be today’s highlight where those with a vested interest will be watching the release for any hints as to the outlook for monetary policy; a challenge to further gains lies ahead in the 1.0480/1.0500 resistance channel. Looking ahead, Fed minutes and Chinese manufacturing figures both loom later this week as potential sources of volatility.
European stocks recorded three consecutive day of gains driven by optimism central banks from both sides of the Atlantic will opt for new stimulus initiatives to underpin growth.
We expect a range today of 1.0380 – 1.0480
New Zealand Dollar
The New Zealand Dollar gained along with other beneficiaries of positive risk sentiment during the first day of trade this week, although gains have been reserved ahead of European meetings this week. Rallying from support near 0.8060 to highs just above 0.8100, nervous investors sold the Kiwi back to 0.8085 before key leaders meet to discuss the Euro-zone’s debt troubles later this week. The RBNZ’s inflation expectations will hold investors attention during local hours although attention will no doubt switch to general sentiment once London hours commence. Trade against the Aussie has been rather uneventful with the cross oscillating in a 20 point range and returning to yesterday’s open of 0.7745.
We expect a range today of 0.8050 – 0.8130
Great British Pound
Anticipation of further developments in European debt crisis-fighting has bolstered risk appetite throughout Monday, although gains remain limited as the threat of disappointment looms over the up-coming meetings of the region’s leaders. Sterling posted little reaction to its own Rightmove house price index (the only item scheduled on Monday’s economic calendar), and instead recovered from lows of 1.5680 to bounce above 1.5700 by local hours. Holding onto these gains, Cable trades at 1.5710 this morning ahead of net borrowing figures from the UK’s public sector this evening; trade was also relatively subdued against the Aussie and Kiwi dollars, with the crosses currently at 1.5040 and 1.9420 respectively.
We expect a range today of 1.4970 – 1.5090
It has been a quiet start to the week in currency markets as a bare economic calendar and few headlines gave traders little to work with. The euro has gained slightly as sentiment remains positive towards the unified resolution of the regions debt troubles, however German prudence is always going to provide some volatility. The single currency unit trades this morning at 1.2340, some 20 points higher than Monday’s open, although ahead this week Greek PM Antonis Samaras is scheduled to try and negotiate a relaxing of previously agreed bailout conditions; although a lot of headwinds are expected and this uncertainty could place some downside risk on the Euro. The Greenback remains supported on a brighter economic outlook and although slipping slightly has maintained a healthy margin above 79.00 at 79.45 this morning against the Japanese Yen; the Fed minutes are also present on Thursday to potentially create some volatility in the Greenback.
AUD: RBA Monetary Policy Meeting Minutes
NZD: Inflation Expectations q/q; Visitor Arrivals m/m; Credit Card Spending y/y
JPY: All Industries Activity m/m
GBP: Public Sector Net Borrowing; CBI Industrial Order Expectations
EUR: No data due for release
USD: No data due for release