Markets stabilise, Greece still in focus

Australian Dollar:

Having initially slumped to its lowest level since May 2009 upon open yesterday morning, conditions have since calmed overnight with the Australian dollar trading 30 basis points either side of the 75 US Cents mark. As investors continued to mull over Greek developments overnight, liquidity has been poor with investors generally favouring traditional safe-haven holdings ahead of growth and commodity backed currencies. Opening higher this morning at a rate of 0.7498 when valued against its US Counterpart, the Reserve Bank of Australia is expected to meet this afternoon, a policy decision many believe will not deliver any additional forms of monetary support.

• We expect a range today of 0.7460 – 0.7550

New Zealand Dollar:

Adding to an already fragile international backdrop China’s stock market recorded historically one of its most choppy days in over decade after a raft of government-led emergency measures triggered a sustained early rally worth 7 percent, that is before the market kicked-started another free-fall having now lost more than $US 3 trillion in vale over the past three weeks. In currency developments the New Zealand dollar has found support around the 66.50 US Cents mark overnight, trading in a relatively tight 60 basis point range when valued against its US Counterpart. Outside of a business confidence survey due for release this morning, the Kiwi’s direction from here lies still very much at the mercy of broader risk flows. Opening stronger the New Zealand dollar currently swaps hand at a rate of 0.6687.

• We expect a range today of 0.6630 – 0.6720

Great British Pound:

Playing a supportive role for the Sterling overnight, US economic data whilst still improving was not strong enough to boost the prospects surrounding an early rate hike by the US Federal Reserve. With the onus now squarely on Greece to act quickly in order to avoid a complete melt-down of its banks the Great British Pound has done to advance in the context of global concerns, stronger when valued against the world’s reserve currency. Currently trading at a rate of 1.5606 some impressive gains have also been notched up when valued against both the Australian dollar (2.0811) and the New Zealand dollar (2.3333).

• We expect a range today of 2.0720 – 2.0850

Majors:

Following a dramatic start to the new week currency markets have stabilised overnight opening broadly unchanged as investors continue to cling to safety ahead of further Greek developments. Having already witnessed the initial plight into both the Yen and the USD, risk positioning still remains a key determinant of prices upon open this morning. Despite further warnings from France and Germany that Greece need to move quickly if they wish to restart financial aid talks, the ECB for the time being maintain a tight grip on Greek banks which have remained closed for week in an attempt to stem a run on deposits. With European leaders now due to meet this evening as part of their euro-summit, the ball is once in Tsipras’s court to see whether a serious and credible proposal can be put forward. In the wake of heightened uncertainty the EUR remains resilient as fears of broader contagion remain well in-check. Stronger against the Greenback this morning the EUR is currently trading at 1.1056.

Data releases

• AUD: Cash Rate, RBA Rate Statement 
• NZD: NZIER Business Confidence  
• JPY: No data today   
• GBP: Manufacturing Production m/m, Halifax HPI m/m
• EUR: Eurogroup Meetings, Euro Summit
• USD: Trade Balance