Amid increased demand for higher-yeilding assets the Australian dollar rose against its US Counterpart yesterday, following global stocks and commodities higher. Helping the cause of the Australian unit, weaker than expected data releases out of the US has again fuelled speculation of further stimulus measures from the US Federal Reserve, hence we open this morning with a slightly weaker Greenback. Trading to an overnight high of 1.0032 the Australian Dollar opens above parity currenlty swapping hands at a rate of 1.0022. Despite the week of steady gains for the riskier backed unit, bumpy times lie ahead as investors nervously await the outcome of Greek elections which are due to kick off this weekend. With Polling results banned in the 2 weeks leading up the June 15 vote, it still remains unclear whether voters will sway either for or against austerity which will ulitmately determine the future of Greece within the 17-nation Euro pact.
We expect a range today of 0.9950 – 1.0070
New Zealand Dollar
In line with the majority of expectations New Zealand’s Reserve Bank Governor Alan Bollard left the official cash rate unchanged yesterday, maintaining the record low of 2.5 percent. Whilst also leaning towards a more neutral stance, it now appears that any future interest rate increases have been temporary sidelined. Trading between a 24 hour range of (0.7732 – 0.7832) against its US Counterpart the New Zealand Dollar traded generally higher in overnight trade, propped up by a weaker Greenback as investors continue to sit tight ahead of the all important Greek elections due to begin this weekend. Meanwhile this morning the Kiwi opens close to a full cent stronger against the US Dollar as it currently buys 78.24 US Cents
We expect a range today of 0.7760 – 0.7870
Great British Pound
Headlining news out the UK overnight, reports that Chancellor of the Exchequei George Osborne and Bank of England Governor Mervyn King are preparing two programs to increase the flow of credit, demonstrate a clear change of direction for Policy markes given their previous reluctance to boost liquidity. Activating an unused plan to inject 5 billion pounds a month into the financial system there now appears a real desire to remain pro-active given the deteriorating outlook in the Euro area. Opening generally stronger against the Greenback at a rate of 1.5559 this morning the advances of the Sterling were however limited falling against both the Aussie 1.5520 and the Kiwi 1.9874. In what is shaping up as a volatile 24 hours, markets are likely remain extremely cautious ahead of key risk events in neighbouring Europe.
We expect a range today of 1.5470 – 1.5580
US Stocks rose overnight, erasing weekly losses as a string of disapointing data releases in the US has again fuelled speculation of further easing measures out of the US Federal Reserve. Given weekly unemployment claims which increased to 386 000, inflationary numbers were also weak, adding to the pile of soft US Data of late. All in all, its little surprise to see the Greenback sligtly weaker across the board this morning despite the overall cautious approach of markets leading into Greek Elections this weekend. Jumping across into Europe and the news didn’t get a whole lot better, Moody’s downgrade of Spainish debt now has it sitting just one level above junk as Spanish 10-yr bond yields increased to a Euro-area high, just short of 7 percent. Remaining relatively range-bound overnight the Euro has managed to find some upside against its US Counterpart as it opens 70 points stronger this morning at a rate of 1.2631. In what is shaping up as a monumental couple of days, the all defining Greek elections as well next Wednesday’s Federal Reserve Meeting are likely to set the tone for markets for the month ahead.
No data today
NZD: Business NZ Manufacturing Index
Monetary Policy Statement, Overnight Call Rate, BOJ Press Conference
GBP: Trade Balance
Employment Change q/q, Trade Balance, ECB President Draghi Speaks, Italian Trade Balance
Empire State Manufacturing Index, Industrial Production m/m, Prelim UoM Consumer Sentiment