Aussies downward spiral continues below 0.80 U.S cents

Australian Dollar:

Keeping in mind the Australian dollar traded up above the 95 US Cents mark as recently as July last year the local unit has been pummelled overnight on Friday dropping to a low of 0.7879 when valued against its US Counterpart. Having dropped below the critical 80 US cents handle for the first time since July 2009, sellers have flooded the market since, a move indicative of large scale orders being triggered during its downward run. Opening this morning a staggering 130 basis points lower at a rate of 0.7897 the Australia day public holiday will keep a lot of investors on the sidelines keeping conditions choppy given the notable drop in liquidity.

• We expect a range today of 0.7840 – 0.7960

New Zealand Dollar:

The New Zealand dollar opens lower to start the week weighed down by emerging Greek election results and the continued fallout from the European Central Bank’s aggressive quantitative easing measures. As hedge funds and speculators look to fuel USD longs on expectations of diverging monetary policy the demand for commodity currencies has waned and the Kiwi has plummeted, falling from 0.78 at open on January 19 to trade at 0.7420 this morning. Attentions now turn to Trade Balance reports and the RBNZ’s rate announcement Thursday as the key market events this week.  

• We expect a range today of 0.7320 – 0.7520

Great British Pound:

Having lost close to two US Cents when valued against its US Counterpart last week the Great British Pound opens marginally lower still this morning at a rate of 1.4989. Despite retail sales which surprisingly grew by 0.4 percent during December the Sterling has struggled to maintain its value up above the 1.50 mark given a broadly stronger US dollar as well as notable economic weakness throughout neighbouring Europe. With tomorrows preliminary GDP print shaping up as the Sterling’s next major hurdle the Great British Pound opens stronger against both the Aussie (1.8926) and the Kiwi (2.0078) this morning. 

• We expect a range today of 1.8810 - 1.9280

Majors:

Having plummeted 5.4% throughout January the Euro’s downward spiral continues into a new week as Greek election results filter through and exit polls suggest the Syriza party is set for a comfortable triumph. The anti–austerity group and its leader Alexis Tsipras campaigned on abandoning Greece’s budget constraints and negotiating a write down of Greek debt. As it stands the party is set to garner more than the 33% of votes needed to hold a majority in Greek Parliament and their victory is only going to add further downward pressure on the embattled bloc currency as it enhances the risk of an exit from the currency union.  Having plunged to 11 year lows in the wake of the ECB’s aggressive quantitative easing plans the euro fell below 1.1140 in the early hours of trade this morning. The U.S Dollar rally continued through Friday as markets and hedge funds continue to place long bets on the world’s base currency. According to the Washington based Commodity Futures Trading Commission the number of net shorts on Euro positions have reached their highest level in two and a half years as markets look set to test 1.10 within the next 24 hours. Attentions now turn to a German IFO business climate report as the solitary macroeconomic driver through trade on Monday.

Data releases

• AUD: Australia Day Public Holiday
• NZD: Credit Card Spending y/y
• JPY: Monetary Policy Meeting Minutes and Trade Balance         
• GBP:BBA Mortgage Approvals
• EUR: German Ifo Business Climate and Eurogroup Meetings      
• USD: No Data