Currency Update: The Australian Dollar is steady after a night of heightened volatility in currency markets thinned by the Northern Hemisphere summer. The US Dollar rallied strongly on better-than-expected US jobless claims data but then reversed as US capital flows data suggested historically large portfolio outflows for June and as the gold price rallied. The moves were evident across all currencies. The #AUD fell from 0.9180 to a low of 0.9058 on the claims data and then reversed to current levels of 0.9150 this morning. In similar moves, the G4 currency pairs all carved out ranges of around 150 pips. The #GBP finished the strongest, aided by stronger-than-expected UK retail sales data. The #JPY was also a net beneficiary of the volatility, presumably strengthening as markets become increasingly sceptical of the waning political momentum behind Prime Minister Abe’s reform agenda. Today, the markets will likely attempt to consolidate these moves, but also make sense of the US capital flows data, which appear somewhat at odds with the consensus around the movement of capital following the US Federal Reserve’s announcement of tapering in May. In Australia today, #RBA Assistant Governor Debelle will be speaking on “The Impact of Payments System and Prudential Reforms on the RBA’s Provision of Liquidity” at 11:30AEST. Today, we anticipate a day of consolidation and would note a lot of AUD buying interest associated with the rise in metals prices, notably iron ore, which has risen by 10%, to above $140 a tonne since the beginning of August. However, the risk for the AUD looking forward is lower, as the Fed’s tapering decision approaches. Today’s Forecast Range: #USD 0.9075 – 0.9175.
Posted on: Fri, 16 Aug 2013 00:07:55 +0000
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