Daily Dollar Forecast 07/05/2012
Australian Dollar
Some stellar Australian retail sales for the month of May added to the recent chain of positive economic releases and the Australian dollar rallied accordingly. Spiking immediately through 1.0300, the reaction was hard to maintain and the Aussie soon fell back to earlier levels closer to 1.0280 as markets awaited the offshore sessions. Europe hours brought disappointment for the health of the German services sector and combined with a holiday in the US, thin markets meant risk appetite traded cautiously through until this morning. Opening still well supported at 1.0270, today we await local trade balance figures before attention shifts offshore top European and UK central bank meetings.
We expect a range today of 1.0210 – 1.0310
New Zealand Dollar
The New Zealand dollar has held up despite a declining euro, as risky assets remain supported on the anticipation of central bank action from the ECB later this evening. In a move that will hopefully support global growth for the time being the Kiwi has avoided being dragged into the euro-drama and remains supported above 0.8020; Changing hands this morning at 0.8035, the Aussie cross rate has also drifted in a sideways fashion despite an earlier move lower after Australian retail sales beat expectations; opening levels today of the AUD/NZD are 1.2780 (0.7825).
We expect a range today of 0.7980 – 0.8070
Great British Pound
The services sector in the United Kingdom expanded at a slower rate in June than both the previous month and compared with analysts’ forecasts. Sterling weakened on the news, falling to an eventual low of 1.5575 as most believe this increases the likelihood the Bank of England will act this evening. Scheduled to meet for their monthly monetary policy meeting this evening, consensus says they will leave rates unchanged at 0.5% but will expand their asset purchasing program by 50 billion pounds. The Australian dollar gained even more ground after positive retail sales figures and this morning trades at 1.5176; the New Zealand dollar also gaining ground to push Sterling down to 1.9395.
We expect a range today of 1.5100 – 1.5250
Majors
The Euro has fallen even further yesterday after poor services data from Germany added to speculation the ECB will cut the benchmark rate this evening by 25 basis points to 0.75%. Also worrying is the services index fell below the critical 50.0 level signalling the sector is actually contracting, and with Germany the support beam of the euro-zone investors are understandably concerned. Dropping to just above 1.2500 and trading this morning at 1.2530 the euro has pared around half the gains achieved after last week’s EU summit. With the US celebrating the 4th July the Greenback was noticeably subdued and trade with the Japanese Yen reflected this; a narrow range around 79.80 was the flavour of the day with the safe haven duo opening this morning at 79.85 . Tonight we await the ECB central bank meeting where markets expect moves to support the euro-zone economy as well as the ADP employment survey from the US along with unemployment claims and ISM non-manufacturing PMI.
Data releases:
AUD: Trade Balance;
NZD: No data due for release
JPY: No data due for release
GBP: BOE meeting; MPC Rate Statement
EUR: ECB meeting; ECB Press Conference
USD: ISM Non-Manufacturing PMI; Unemployment Claims; ADP Non-Farm Employment Change