By Matt Richardson
The Australian dollar opens in familiar territory this morning trading just below key resistance levels. With little domestic data available to influence direction the AUD took its cues from offshore stimuli where it seems the fallout from the Fed’s FOMC statement continues. Investors have been forced to reposition themselves as prolonged accommodative monetary policy seems most likely and the USD has suffered losing ground against most major peers over the last 48 hours. With a quiet economic calendar ahead of us it is unlikely we will see the Aussie move much outside recent ranges as traders search for a catalyst to push the unit through 0.94.
We expect a range today between 0.9320 – 0.9420
The NZD held on to gains throughout trade on Thursday and bounced around within a tight trading band. First Quarter GDP remained stable and investors held onto higher yielding assets in the wake of the Fed Reserve’s FOMC statement. With little available on the economic calendar to close the week direction will come from off shore stimuli, however the absence of headline data across the board we will likely see NZD maintain recent ranges leading into the weekend.
We expect a range today between 0.8680 – 0.8780
The Pound moved higher throughout trade on Thursday as investors looked to dump USD and USD denominated assets after the Fed’s dovish twist. Sterling broke through the 1.70 barrier for the first time since 2008 in a move that highlights the importance markets are currently placing on central bank policy and forward guidance. With expectations of a shift in Monetary Policy snowballing the increased attractiveness of GBP has triggered a 3 percent rally in the past 6 months. With little headline data available today we expect the current pattern to hold into the weekend.
We expect a range today between 1.8080 – 1.8200
The fallout from Wednesdays Federal Open Market Committee (FOMC) statement continued throughout trade on Thursday as the Greenback fell to a one month low against its major currency counterparts. Markets were largely expecting a hawkish outlook from Fed Chair Janet Yellen and the FOMC, instead the dovish tone and reduction in long term interest rates and growth projections forced analysts to adjust their medium to long term monetary policy expectations. A greater than expected reduction in unemployment claims and stronger manufacturing data were not enough to stop the run on the USD as it seems the current price movements are position related with markets adjusting their stance having adopted a hawkish bias leading into Fed announcement. With little headline data on the domestic dockets both the EURO and Yen tracked higher taking advantage of the weakening and repositioned USD. EUR/USD opens at 136.06 while USD/JPY trades below 102 at 101.94. Attentions now look toward key European Manufacturing numbers Monday and a string of US homes and consumer data throughout the week for further direction.