27 Jun 2014

27 June 2014 – Aussie Dollar rally limited (OZ FOREX)

By Michael Judge

Australian Dollar:

The value of the Australian dollar has remained steady over the course of the past 24 hours a period in which trading ranges have tightened significantly. Almost stalling completely, lows of 0.9395 were countered by a highs of 0.9417 for the higher yielding asset when valued against its US Counterpart. During an offshore session dictated once again by low volumes and signs of weakness throughout the world’s largest economy, a lower US dollar mixed with some solid yields still on offer locally have combined in helping the Australian dollar maintain its value just above the 94 US cents mark upon open this morning.  

We expect a range today of 0.9370 – 0.9430

New Zealand Dollar:

Stopping one cent short of its all-time highest level when valued against its US Counterpart, the New Zealand dollar traded to an overnight peak of 0.8787 around 50 basis points above its opening level. Spurring demand for the Kiwi overnight consumer spending in the US rose by a mere 0.2 percent during May a figure well short of the expected read of 0.4 percent. In a week defined by a string disappointing US data prints the New Zealand dollar has continued to defy the long-term bears given the nations relatively attractive interest rate outlook. Opening notably stronger this morning the Kiwi currently buys 87.77 US Cents.

We expect a range today of 0.8740 – 0.8800

Great British Pound:

The Great British Pound rose versus 13 of its 16 major counterparts overnight after the Bank of England announced some lenient mortgage limits, a policy change designed to limit riskier home loans and broader consumer debt. Improving sentiment the announcement by the BOE has been well received by investors on the expectation the new measures to cool the housing market won’t derail broader growth aspirations. Rising from an earlier low of 1.6970 the Great British Pound opens stronger when valued against its US Counterpart this morning at a rate of 1.7025. In other currency moves the Sterling is stronger also against the Aussie (1.8085) whilst weaker against the Kiwi (1.9386).

We expect a range today of 1.8050 – 1.8110


Despite comments from President of the Federal Reserve Bank of St.Louis James Bullard who suggested that higher interest rates may happen sooner than many people think, US Stocks fell for a third time in four days not assisted by ongoing poor economic prints from the world’s largest economy. In a number which further tarnished sentiment, consumer spending which accounts for 70 percent of the United States growth rose by a mere 0.2 percent in May a disappointing result in line with the overall economic contraction witnessed during quarter one. With the Greenback once again weighed down overnight the US dollar opens weaker against the Yen at a rate of 101.685 whilst slightly stronger against the Euro at 1.3610.

Data releases


No data today

NZD: Trade Balance


Household Spending y/y, Tokyo Core CPI y/y, Retail Sales y/y

GBP: Current Account, Final GDP q/q


German Prelim CPI m/m, French Consumer Spending m/m, EU Economic Sentiment

USD: Revised Consumer Sentiment

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