US Fed hoses down rate expectations

Australian Dollar:

The Australian dollar has enjoyed an impressive rally over the course of the past 24 hours, hitting a four week high of 0.7900 when valued against its US Counterpart. Assisted by a weaker greenback which lost value following comments by US Federal Reserve Chair Janet Yellen that it would be several months before policy makers raised interest rates further gains were made following news that China’s factory sector had expanded its level of output during the month of February. Having appreciated notably overnight the Australian dollar opens in a strong position this morning as it currently buys 78.92 US Cents.    

We expect a range today of 0.7830 – 0.7930

New Zealand Dollar:

Following a similar course to its trans-transman rival the New Zealand dollar has strengthened overnight when valued against its US Counterpart after US Policy Makers suggested they remain in no hurry to raise interest rates during a second day of testimony before the Senate Banking Committee. Stronger more so as a result of Greenback weakness the Kiwi opens half a cent higher this morning at a rate of 0.7546. On the horizon today trade balance numbers expected out shortly will be the main driver followed by CPI results from the United States this evening.

We expect a range today of 0.7500 – 0.7600

Great British Pound:

In the absence of any local data which was on hand investors have appeared comfortable in picking up the Great British Pound overnight particularly in the wake of a notably weaker US Dollar. Rising to a high of 1.5537 the search for global yields continued overnight as US policy makers hosed down the idea that US rate rises were only just around the corner. With Mark Carney still remaining overall hawkish on the domestic outlook it’s now necessary for the economic numbers to be overall supportive of such a stance. Opening weaker this morning against both the Aussie (1.9671) and the Kiwi (2.0573) a second estimate of GDP growth for Q4 2014 is expected to be released this evening.

We expect a range today of 1.9630 -1.9730

Majors:

The US dollar has fallen against a basket of currencies overnight driven lower by comments made by Janet Yellen who has suggested that the removal of the word “patient” from their underlying statement wouldn’t necessarily signal that an interest rate increase was imminent. Managing to reduce the expectations which surround the timing of a rate rise, yields on short-dated US treasuries have temporarily been pulled back. In other developments overnight US new home sales fell less than forecast in January whilst in Europe doubts remained well entrenched that Greece would struggle in its efforts to repay both IMF and ECB debtors in the wake of the most recent four-month extension on bailout terms which were approved. Steady against the Yen this morning at a rate of 118.822 the US dollar is weaker against the 18 nation euro at 1.1355.

Data releases

AUD: Private Capital Expenditure q/q

NZD: Trade Balance

JPY: No data today

GBP: Second estimate GDP q/q

EUR: No data today

USD: CPI m/m, Core CPI m/m, Unemployment Claims

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