The Australia dollar continued to firm following yesterday's surprise building approval monthly surge and briefly traded as high as 95.25 US cents during the European session but was yet again caught by a stronger US dollar during the US session which has been a theme this week. The US dollar strengthened as expectations that the Fed may move earlier in 2014 than previously expected on tapering. The sentiment helped the Aussie drop about 70 pips to 94.51 US cents which is close to the low it was trading at post FOMC meeting yesterday. The US dollar strength was evident with Gold falling to low of 1319 USD an ounce and New Zealand dollar easing back to 82.54 US cents.
The Euro had a horrible last 24 hours against all crosses as disappointing data weighed on its trade overnight. German monthly retail sales missed the mark at -0.4%, unemployment rose in Italy to 12.5%, the European CPI estimate dropped to 0.7% year on year and the European unemployment rate unexpectedly was revised to 12.2% last month and remained at that level this month. The data coupled with a better performed US dollar saw the Euro slip in the last 24 hours 120 pips versus the Aussie, 90 pips versus the Pound, 50 pips versus the Greenback.
Today’s local session will be China focused with Chinese government manufacturing PMI and HSBC final manufacturing PMI up for release. Both are expected to tread water at current levels although the government issued release tends to have more divergence from market estimates. Preceding these releases will be quarterly PPI data from Australia which is expected to move to 0.4% keeping the Australian dollar emphasis through trade today.
Joel Murphy
www.pepperstone.com Joel Murphy is a currency analyst and market commentator for Forex Broker Pepperstone and he regularly features on Sky Business News Australia. He has worked in both retail and institutional Forex for last 8 years and completed a Bachelor of Commerce and a Bachelor of Arts from Monash University
