AUD/USD 0.9365 – 0.9470
NZD/USD 0.8275 – 0.8335
GBP/AUD 1.7040 – 1.7125
Australian Dollar:
The Aussie began the week in a strong position yesterday, pushing above 0.9445, but as Asian equity markets began the week lower, the higher yielding asset failed to reach the 0.9450 level and eventually traded lower on the back of general risk aversion among investors. AiG construction index improved to 47.6 which initially had us trending higher but a cut by the World Bank on their outlook for Chinese GDP saw us reverse previous gains as we slipped to an eventual low near 0.9390. With investors continuing to lose confidence in the chance of an early resolution to the US debt issue the greenback lost ground against most of its counterparts, in particular the Japanese yen, and this in turn saw us recover back above 94 US cents overnight. This morning we find the Aussie back at 94.25 US cents with local focus likely to be on NAB business confidence before we again turn back to the developing situation in the US
New Zealand Dollar:
We find the Kiwi trading close to where it was this time yesterday as the two forces resulting from the crises in the US continue to pull the currency in opposite directions. Falls for major Asian equity markets yesterday initially saw us dip below 83 US cents as the risk aversion translated to moves lower for the commodity currencies. Also pushing us lower was a report out of the World Bank which lowered forecasts for growth for China and developing Asia as a whole which if it eventuates would translate to lower demand for New Zealand's commodities. Heading into US trade the second force of the US debt issue came into play with the greenback coming under selling pressure, lifting the local unit back above 83 US cents but this didn't translate to other crosses and NZD/JPY remains lower this morning at 80.40. This morning sees local business confidence data and with a similar reading out of Australia we may see some movements on that cross which is currently at 1.1335
Great British Pound:
The pound recaptured much of Friday's losses yesterday, moving back towards 1.61 as the US debt issue had investors moving away from the greenback. While other currencies experienced a mixed day yesterday as risk aversion prevented any strong moves higher against the US dollar, the sterling was one of the favoured currencies for investors seeking to move away from the greenback but also looking to avoid the higher yielding, riskier assets. We currently find GBP/USD at 1.6090 and with most US data likely to be postponed while the government remains closed, direction will likely come from the Bank of England rate decision which is out on Thursday night. Meanwhile the Aussie and the Kiwi were unable to take full advantage of the fall in the greenback due to their strong risk correlation and we find GBP/AUD and GBP/NZD higher at 1.7075 and 1.9370 respectively.
Majors currency latest update:
The US debt ceiling and the government shutdown continues to dominate headlines and investor focus, pushing the greenback lower while at the same time causing risk aversion. This has seen the US dollar fall sharply against the safe haven yen and drift lower against the Euro but the riskier assets such as the commodity currencies failed to push ahead as they were dragged down by falling equities. Those that were previously claiming that this will be just like all previous run ins with the debt ceiling (i.e. an eleventh hour agreement) are sounding less convinced as both sides of politics appear to have talked themselves into a situation where neither can give ground. Equities were down across Asia, Europe and the US with the S&P closing at a four week low with investors voicing their disapproval of the current impasse. In Europe there were some positives with confirmation that the region moved out of recession in the April to June quarter with the final reading of GDP coming in as expected at 0.3%, this aided in further lifting the shared currency against the greenback and we find it this morning at 1.3575. Looking ahead there will continue to be missed data pieces out of the US as the government shutdown prevents their release, while out of Europe we have a series of German data due for release tonight, but this will likely only garner minor attention as investors and the media remain focused on the debacle in the US. The yen has been the biggest benefactor of the current situation, due to its safe haven status, and we currently find USD/JPY at a near four week low at 96.75.
Data releases:
AUD: NAB Business confidence, ANZ job advertisements
NZD: NZIER business opinion survey
JPY: Trade balance, Current account balance, Bankruptcies, Eco watchers survey
GBP: RICS house price balance
EUR: German trade balance, German current account, German factory orders
USD: NFIB survey
Source: ozforex
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