AUD/USD1.0395 – 1.0475
NZD/USD0.8175 – 0.8285
GBP/AUD1.4500 – 1.4580
Australian Dollar fundamental analysis:
After starting the day off well, the dollar began drifting lower after local politics took focus, with uncertainty over the Prime Minister keeping the Aussie flat. Currency markets dislike uncertainty and this was reflected in the AUD falling against all of its major counterparts leading up to the 4:30 pm leadership ballot. With the circus ending in a non-event of no challenger to the PM the brakes were taken off the Aussie which had gained earlier in the day on the back of better than expected China HSBC flash PMI data which came in at 51.7 compared to estimates of 50.8. The numbers are a pleasant change from recent disappointing Chinese figures and European investors took the opportunity to send the Aussie through 1.04. Continued issues with Cyprus and poor European data didn't detract from the Aussie which then also gained as some better than expected US helped push risk and the AUD up to an eventual high around 1.0450. This morning we find it slightly lower at 1.0435 as news of an S&P downgrade of Cyprus begins to weigh on sentiment.
New Zealand Dollar fundamental analysis:
The New Zealand Dollar's poor run was well and truly reversed yesterday following much better than expected GDP data. It appears the effects of a high NZD hasn't capped growth too much with quarterly growth coming in at 1.5% up from expectations of 0.9% sending our south pacific currency through to 0.8300. This figure is also nearly twice what the RBNZ was forecasting for and may lead to investors reconsidering recent forecasts for interest rate movements this year. The headwind of draught will likely start showing in this quarter's figures but such a positive number yesterday leaves quite a bit more room. With some positive Chinese data also offering support we saw the Kiwi extend its gains in European and North American trade to reach highs around 0.8340 before settling lower to open this morning at 0.8315. NZD/EUR is also a highlight having broken through 0.64 last night and is currently trading hands at 0.6445 which is the highest it's been this year.
Great British Pound fundamental analysis:
The pound has finally managed to have a strong night and still hang onto most of the gains at our open after retail sales came in better than expected and the pound benefited from a falling Euro. The Office of National Statistics last night reported that retail sales came in at 1.9%, much better than the expected 0.6% and a solid leap from -0.4% the previous month. This will have some investors pulling back bets that the BoE will add monetary stimulus this year leading to the cable moving towards 1.5200. With some poor PMI data in Europe and continued concerns over Cyprus weighing on the Euro, the EUR/GBP cross has fallen back to 0.85 which also helped in pushing the sterling just past 1.5200 temporarily before it settled at this morning's open of 1.5175. With Aussie and Kiwi also having strong sessions we find those crosses slightly lower at 1.4536 and 1.8250 respectively
Global markets and Majors currency fundamental analysis:
The Euro has again come under pressure as PMI declines while problems with Cyprus continue with the ECB placing a deadline of March 25 to raise funds. PMI numbers in Europe were down across the board with Eurozone composite down to 46.5 compared to expectations of 48.2 while German manufacturing surprisingly moved into contraction again at 48.9. This saw the Euro give up the previous day's gains to move back below 1.29. To make things worse, sentiment is also weighing after the ECB has said they will cut emergency funding on Monday if the extra 5.8b is not raised to qualify Cyprus for their bailout, this will effectively mean the banks will start defaulting and will not be able to open on Tuesday as currently scheduled leading to a likely Euro exit for the island nation. Moving to the US the story was much more upbeat as we had some second tier US data coming in mostly positive with Philadelphia Fed factory index rising to 2.0, Leading indicators rose to 0.5% and Existing home sales coming in flat at 0.8. Surprisingly this led to a break in the recent trend of US data being positive for USD and instead we saw the greenback underperform, particularly against our south pacific crosses and the Yen. The JPY was also stronger as doubts emerge on the new BOJ's ability to engineer higher inflation while risk flows out Europe also helped in sending USD/JPY back below 95.00 and EUR/JPY below 122.50. There is not much data left this week, meaning eyes will remain focused on Cyprus.
Source: ozforex
Data releases:
AUD: Conference board leading index
NZD: ANZ job ads, Net migration
JPY: Bonds and stocks
GBP: No data today
EUR: German IFO business climate
USD: Fed's Raskin speaks, Revisions of industrial production
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