Australian Dollar:

Having opened the day at a rate of 0.9295 after falling 2.7 percent from its pre FOMC level there was no respite for the falling Australian dollar yesterday which continued its downward spiral. Hitting an intraday low around 0.9240 when valued against the Greenback, the release of the HSBC flash Manufacturing Index which comfortably disappointed with a reading of 48.3 in June (versus expected read of 49.4), the weakest result since September only added to investors jitters. Accelerating the move away from the Australian dollar signs of improved growth within the world’s largest economy will only serve to further strengthen the USD. Following another fresh bout of overnight selling the tide still remains well and truly out for the Australian dollar this morning which opens one full US Cents lower as it currently buys 91.94 US Cents.

  • We expect a range today of 0. 9150 – 0.9230

New Zealand Dollar

Providing yet another reason to sell the New Zealand dollar yesterday figures showed Gross Domestic Product was up a mere 0.3 percent in the March 2013 quarter, well behind the forecasted growth result of 0.6  percent. Demonstrating the net effect of the drought on growth this was partly offset by the rebuild activity associated with the earthquake. Whilst not weak enough to change the RBNZ’s interest rate outlook, a disappointing GDP read on top of the poor manufacturing figures released from China provided a further catalyst for investors to continue their move out of the NZD and back into the USD. After touching lows of 0.7711 against its US Counterpart the New Zealand finds itself a staggering 1.4 percent from where it opened yesterday as it currently buys 77.52 US cents.  

  • We expect a range today of 0.7720 – 0.7780

Great British Pound:

Whilst figures overnight showed production levels among manufactures were flat in the three months to June, adding to signs that an economic recovery is under way, retail sales jumped by 2.1 percent in April, comfortably exceeding expectations. Despite the monumental shift back into the Greenback which has been witnessed the Great British Pound has done extremely well over the past 24 hours to keep pace, appreciating against the US dollar. After reaching highs of 1.5515 the Sterling is stronger upon opening this morning at 1.5500. Bringing into context just how impressive a move it has been for the Sterling, the Pound has rallied a staggering 2 percent against the Aussie (1.6885) and whopping 4 percent against the Kiwi (1.9984).

  • We expect a range today of 1.6820 – 1.6890


Emphasising just how big a move we are seeing by investors back into US Dollar dominated assets post FOMC, yields on US 10-year Treasury notes have surged over the past 48 hours to their highest level since 2011, offering up a rate of return of 2.47 percent. In another example of the flows which are occurring the US dollar has also been a major benefactor since Ben Bernanke said policy makers would end bond purchases by mid 2014 having rallied against 15 of its 16 major counterparties overnight. With signs that yields throughout the US are starting to normalise there has also been a noted move out of equity markets highlighting just how important US monetary policy remains for broader financial markets. Racing to overnight highs of 98.276 the US dollar opens around 1 percent higher against the Japanese Yen this morning at a rate of 97.271. Meanwhile across in Europe, despite a string of PMI readings which beat forecast, signs of an improved manufacturing backdrop was not enough to save the Euro from a rampaging Greenback as it opens weaker by comparison this morning at rate of 1.3220.   

Data releases

  • AUD: No data today
  • NZD: No data today  
  • JPY: BOJ Gov Kuroda Speaks
  • GBP: Public Sector Net Borrowing
  • EUR: ECOFIN Meetings
  • USD: Existing Home Sales, Philly Fed Manufacturing Index


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