After nearly 3 weeks of quite furious activity, it was a relatively quiet day and night for the Australian Dollar as the theme of consolidation took hold.

Australia: The AUD traded in a pretty quiet fashion around the USD 1.0500 level during the offshore session. Reserve Bank of Australia Governor Glenn Stevens delivered a considered speech in New York overnight, and somewhat predictably didn’t provide any real insights that could be construed as relevant, to short to medium term monetary policy in Australia.

[Sign up here to get this report delivered to your inbox daily]

Possible because things are poised either way! He spoke of China and India’s rise as economic powerhouses and the continuing growth and emergence of Asia becoming a bigger player in terms of global wealth and finance. He rightly added how the ‘legitimacy’ of institutions such as the G-20 needs to be enhanced.

Tellingly for the AUD, he noted that “few countries have noticed [the rise in the importance of the Chinese economy] more in their trading patterns than Australia”. Base metals all closed lower again overnight, continuing their downward slide for the week in response to continuing doubts about Japanese (and global) demand. Copper fell 1.2%, zinc fell 1.9% and nickel and lead each fell 1.7% on the LME this morning, whilst Aluminium was down 1.6%. Soft commodities were weak overnight. As was the theme yesterday, we feel the AUD will broadly track sideways with resistance levels on the high side most likely holding as the AUD takes a breather.

Majors: The US Dollar enjoyed a quiet night as well despite US equity markets having a choppy day. The markets are digesting US President Obama’s budget plan that aims to cut the budget deficit by USD4 trillion over the next 12 years, slashing the deficit to as low as 2% of GDP over the next decade which contrasts pretty heavily with this year’s projection of 10.9%.

[Sign up here to get this report delivered to your inbox daily]

This plan is still well to the left of the Republican proposals and the markets are hoping middle ground will be found. The Fed’s Beige Book noted the US economy continued to grow at a “moderate pace” with manufacturing and business services continuing to grow. The talk of interest rates will continue, as the US Fed hawks and doves tussle away. Fed Governor Plosser and Tarullo (voters) give speeches tonight and the weekly jobless claim figure will
be scrutinised.

Economic Calendar
NZ: Business

NZ: PMI MAR

AU: New Motor Vehicle Sales MAR

US: PPI MAR

CA: Manufacturing Sales FEB

More from IBT Markets:
Newsletter: To receive Global Markets update, sign up here