Currency trading direction from overnight was not broadly correlated like we have seen across the last few nights. Commodity currencies such as the Aussie, Kiwi and Canadian dollars couldn’t find any real support and all having been sold off for the last 48 hours with the Kiwi just above 82 US cents and Aussie just staying above 92 US cents not helped by the China manufacturing PMI drop. Overnight trade sentiment wasn’t risk on/off driven with the Yen also sliding as the Greenback marched above 101 Yen and held its gains through to this morning. The Aussie wasn’t helped by comments from RBA Governor Stevens last night regarding intervention in the high AUD and US data which showed Unemployment Claims shrinking, supported by Manufacturing PMI expanding. The stronger data all compounding the FOMC minutes which were looking for data to drive tapering in the coming months.
Whilst the Greenback was stronger against a number of its peers, it was the Euro and Pound that dominated trading overnight. The Pound was led by speculation that the BOE would raise rates ahead of forecast after confidence grows in the UK economic recovery. The Euro came back to the fore as ECB President Draghi played down the possibility of negative deposit rates whilst highlighting the rates are likely to go to zero to combat the threat of deflation. The Pound was able to crack the 1.62 USD mark and has taken 5 cents off the AUD in the last two days. The Euro is back above 136 Yen and at 1.459 AUD which have both been 200 pip moves across the last 24 hours.
We have little in the way of economic data through the Asian session today leading to a likely dower day’s trade. We don’t have any US centric economic data to finish the week but with Draghi speaking again tonight and CPI and retail sales data from Canadian there should still be moderate volumes to end the trading week.
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
