AUD holds firms as FOMC minutes offer little insight

Australian Dollar:

The Australian Dollar opens marginally higher this morning having held a tight trading range throughout Wednesday’s session. Westpac’s consumer confidence report failed to break market expectations while Chinese inflation data was marginally below that of analyst consensus and with minimal insight into forward guidance offered within the Federal Reserve’s Open Market Committee June minutes investors had little to drive strong price action. Instead markets looked to higher yielding assets and the AUD found support and drove back through 0.94 having bounced to an intraday low of 0.9388 in the lead up to the FOMC minute release. We turn now to labour market data and today’s unemployment rate for further direction and guidance.

• We expect a range today between 0.9330 – 0.9480

New Zealand Dollar:

The push toward post float highs continued yesterday as the New Zealand Dollar drove higher.

The local economic calendar was free of headline data and the Kiwi was left to off shore vices for direction taking advantage of carry trades and demand for the higher yielding asset. With little offered within the US Federal Reserve’s Open Market Committee meeting minutes to stimulate speculation of an early interest rate hike in the world’s largest economy markets demand for the USD and its denominated assets waned and the NZD pushed to an intraday high of 0.8829. Moving forward todays docket is again quiet with investors looking offshore for a catalyst to push the currency through its record peak of 0.8843 set in August 2011. 

• We expect a range today between 0.8740 – 0.8880 

Great British Pound:

The Great British Pound opens higher this morning and recouped the losses suffered early this week. A quiet local economic calendar meant market focus was solely on the US Fed Reserves June meeting minutes. With few surprises and little forward insight offered investors sold off USD and the late hawkish tone spouted BoE officials meant Sterling became a benefactor forcing cable back through 1.7150 having dipped below 1.71 in the lead up to the FOMC minutes release. Attention now turns to the Bank of England and its Monetary Policy Committee (MPC) as it announces the official bank rate. With expectations rates will be left un-tampered the primary focus will be fixed on the accompanying rate statement for a developing hawkish signal.

• We expect a range today between 1.8180 – 1.8300 

Majors:

The U.S Dollar has again moved lower against the majority of its major currency counterparts as the Fed’s Open Market Committee minutes offered little to encourage an early hike in interest rates. Maintaining a downbeat tone the Fed’s statement was absent of any major surprises and while many analysts expected the dovish note there was some speculation that the committee’s more hawkish members would put pressure on the board to consider an early adjustment of monetary policy. The Central Banks refusal to offer extended insight into its near term thinking have hurt the Greenback. When combined with a string of inconsistent data and softer growth forecasts investors wary of supporting any far-reaching USD rally.

The Euro opens higher against its US counterpart as investors sold down the Greenback. ECB President Mario Draghi suggested the Central Bank was ready to use “unconventional instruments” if needed. The suggestion that large scale asset buying is on the table was not unexpected as the ECB prepares to stimulate growth within the 18 nation block.

Attention now turns to US unemployment claims as the headline ticket moving into the weekly close.  

Data releases

• AUD: Employment Change, Unemployment Rate and MI Inflation Expectations   
• NZD: Business Manufacturing Index
• JPY: Core Machine Orders, Tertiary Industry Activity, 30 Year Bond Auction and Consumer Confidence.
• GBP: Trade Balance, Official Bank Rate, MPC Rate Statement and Asset Purchase Facility
• EUR: French Industrial Production, French CPI, Italian Industrial Production and ECB Monthly Bulletin.
• USD: Unemployment Claims, Wholesale Inventories, 30 Year Bond Auction and FOMC Member Fischer Speaks.