AUD

The RBA release the minutes of its February monetary policy meeting at which it left official interest rates on hold.

The Australian dollar is slightly lower ahead of the outcome of the euro zone finance ministers meeting in Brussels. The European ministers, at a two-day meeting, are expected to approve the delivery of the second bailout package for Greece to save the country from bankruptcy.

At 7am AEDT on Tuesday, the Australian dollar was trading at $US1.0745, down from $US1.0771 on Monday. A failure in Greece could see the AUD down to the 1.05 level.

Dutch Finance Minister Jan Kees De Jager demanded the European Union and the International Monetary Fund take “permanent” control of government decision-making over revenues and public expenditure in Greece.

De Jager said partners committed to providing Greece money for years to come need “some kind of permanent presence” dictating policy on the ground, adding “it is very important when you loan money that you are the boss.”

AUD

The Australian dollar pared the decline from earlier this month amid the slew of positive developments coming out of the $1T economy, but the high-yielding currency may struggle to hold its ground next week should the Reserve Bank of Australia’s meeting minutes fuel speculation for more rate cuts. Although the RBA surprised the market by keeping the benchmark interest rate at 4.25%, the central bank may continue to strike a dovish tone for monetary policy as the board curbs its outlook for growth and inflation.

Indeed, Deputy Governor Philip Lowe held a cautious tone for the region, noting that ‘businesses are scaling back their operations in Australia and some are closing down,’ while Assistant Governor Guy Debelle warned that ‘uncertainty is likely to persist for some time to come’ in light of the ongoing turmoil within the world financial system. As commercial banks in Australia remain reluctant to pass on slew of rate cuts from the previous year, the RBA may see scope to ease monetary policy further, and Governor Glenn Stevens may sound increasingly dovish next week as he’s scheduled to testify before the House of Representatives Standing Committee on Economics on Thursday at 22:30 GMT. Nevertheless, market participants appear to be scaling back bets for lower borrowing costs as Credit Suisse overnight index swaps now reflect expectations for 50bp worth of rate cuts over the next 12-months, but we may see interest rate expectations deteriorate next week should the RBA see scope to cut borrowing costs further in 2012.

The failed test of 1.0800 casts a bearish outlook for the AUD/USD and we may see the exchange rate continue to carve out a top next week as it threatens the upward trending channel carried over from the previous year. In turn, we will keep a close eye on the 20-Day SMA (1.0681) as it holds up as support, but a close below the moving average should lead to a short-term reversal as the relative strength index continues to come off of overbought territory

AUD

FXstreet.com (San Francisco) - The Australian dollar rose against the greenback on Thursday as stronger than expected fundamental data from the U.S. and optimism over a Greek deal lifted risk sentiment. 


"[AUD/USD] Hourly chart shows indicators losing early strength holding in positive territory, while price consolidates in a tight range, supporting further gains more if local share markets follow the European and American lead," explains Valeria Bednarik, Chief Analyst at FXstreet.com. "In bigger time frames, price goes back and forward around a flat 20 SMA since past Tuesday, while indicators regain their midlines, supporting the bullish tone, limited for now as long as below mentioned static resistance level." 


AUD/USD is steady around 1.0750 in early Asia, with support levels noted at 1.0725, 1.0690 and 1.0650, while resistance levels lie at 1.0770, 1.0810 and 1.0850.

AUD

The Australian Dollar was higher against the U.S. Dollar on Thursday after the release of Australian data on Employment Change.

AUD/USD was trading at 1.0719, up 0.22% at time of writing.

The pair was likely to find support at 1.0630, Tuesday’s low, and resistance at 1.0778, Monday’s high.

Earlier in the day, official data showed that Australian employment change rose more-than-expected to a seasonally adjusted 46.3K last month from -35.6K in the preceding month whose figure was revised down from -29.3K.

Analysts had expected Australian employment change to rise 10.9K last month.

Meanwhile, the Australian Dollar was up against the Euro and the Japanese Yen, with EUR/AUD shedding 0.43% to hit 1.2163 and AUD/JPY rising 0.27% to hit 84.11.

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The overnight currency sessions were littered with significant economic data but it was the ongoing influences that drove the majority of market direction.  Greece's austerity measures still remain on the table with European finance ministers to hold a teleconference with Greece in regard to the bailout fund and if they are making enough cuts and the surety of the cuts being made.  Greece's long history of broken promises on reform and the impending election is weighing on the European Union.   The European session however was surprisingly positive following yesterday's rating cuts and warnings from Moody's with the Euro trading through 1.32 USD as a confident Italian bond sale helped illustrate that the Greek issues may be localised. These gains were then quickly unwound following the US retail sales print a few hours later.  US retail sales came in at 0.4% versus median expectation of 0.8% and this drove strong US dollar demand for the rest of the night.

Yesterday's surprise Bank of Japan Quantitative Easing expansion also insulated the Yen from the safety play trade, depreciating versus the US dollar after the retail sales print, where ordinarily you would have expected the opposite.  After the BOJ added a further 10 trillion Yen which it will purchase Japanese government bonds with, the US dollar surged past 78 yen where it last traded 31 October post intervention.  The BOJ also announced that its inflation target will be 1%, as it tries to shrug of deflations concerns while helping boost the economy.

Analysts were spot on with UK inflation expectations which came in at 3.6% from last month's annualised 4.2% print.  One of the reasons for the fall was value added tax (VAT) rise was no longer effecting the figure following last year's move from 17.5% to 20%.  The large drop still sees inflation above target of 2% since 2009 but in his letter to the Chancellor Mervyn King wrote that "The Committee's best collective judgement is that CPI inflation will continue to fall back to around the target by the end of 2012."  The data itself did little to influence the Pound, with Greek concerns and US retail sales seeing the Pound now have given up all of February's gains trading down to 1.5644 USD.

The Australian dollar this morning welcomed a late rally on Wall Street and has clawed back some of overnights losses.  The Australia dollar sits 35 pips from where it traded pre US retails sales print, recovering over 50 pips in the last 120 minutes of the US session.
 

Aud Movement

The Dow Jones-FXCM U.S. Dollar Index remains 0.39 percent lower from the open after moving 73 percent of its average true range, but we should see the rebound from 9,672 gather pace as the greenback finally breaks out of the downward trending channel carried over from the previous month. As retail spending in the world’s largest economy is expected to increase another 0.8% in January, the ongoing expansion in private sector consumption should dampen expectations for additional monetary support, and we may see the FOMC soften its dovish tone for monetary policy as the recovery gradually gathers pace. In turn, the developments on tap for this week should increase the appeal of the USD, but we may see a growing rift within the committee as the pickup in growth raises the prospects for inflation.

As the USDOLLAR bounces back from the 10-Day SMA (9,729), the greenback looks poised to strengthen further over the next 24-hours of trading, and we anticipate to see the index make a run at the 50.0 percent Fibonacci retracement around 9,830 following the failed test of the November low (9,665). As the FOMC is scheduled to release its policy meeting minutes later this week, the remarks could highlight an improved outlook for the U.S. economy, and we may see the central bank endorse a wait-and-see approach for the first-half of 2012 the risk of a double-dip recession subsides. However, as Fed Chairman Ben Bernanke keeps the door open to expand the balance sheet further, speculation for another round of quantitative easing could push the index sideways over the coming days, and we may see the USD consolidate further before we eventually see it retrace the decline from earlier this year.

All four components advanced against the USD on Monday, led by a 0.67 percent rally in the Australian dollar, but the AUD/USD may struggle to hold its ground should it close below the 10-Day SMA (1.0730) for the second day. As the upward trend in the aussie-dollar appears to be giving it, the pair looks poised to give back the rally carried over from the end of 2011, and we may see an aggressive move to the downside as the relative strength index finally falls back from oversold territory. In turn, we should see the exchange rate fall back to the 23.6 percent Fib from the 2010 low to the 2011 high around 1.0350-60 to test for near-term support, but the see the AUD/USD may consolidate further as the developments coming out of the euro-area props up market sentiment.

NZD

The New Zealand dollar fell against the greenback in the New York session on Friday, dropping well below the US83 cent level with markets nervous that the latest Greek austerity package could unravel when it's put to a parliamentary vote.

The kiwi recently traded at US82.58c, down from up from US82.58c at 5pm on Friday, snapping a two month rally. On the Trade Weighted Index of major trading partners' currencies it fell to 72.68 from 72.88.

The optimism surrounding the Greek austerity and debt swap deal appeared to run out of steam on Friday amid reports that the leader of Greece's far-right LAOS party, George Karatzaferis, would refuse to vote in favour of the measure. The party is part of the current governing coalition.

That sparked fears in the market that the deal could run into headwinds when it's placed before parliament later today, triggering a sharp slide in the euro, as well as growth currencies such as the kiwi and Australian dollar.

The sobering mood spread to equity markets, with the Standard & Poor's 500 Index posting its first weekly decline in five straight weeks, falling 0.2 per cent to 1342.64 on Friday. Meanwhile in Europe, the Stoxx 600 Index closed 0.9 per cent lower at 261.24.

"Offshore direction will be critical for the moves of the NZD this week," said Alex Sinton, a senior dealer at ANZ New Zealand. "Initially it should look to the hourly support channel around 82.34c as markets start to realise that implementation of the Greek bailout measures will be much harder than first thought."

On the crosses, the kiwi recently traded at 77.38 Australian cents, little changed from77.39 on Friday, and it fell to 64.10 yen from 64.42 yen. It was little changed at 62.57 euro cents, from 62.55 euro cents previously, and fell to 52.45 pence from 52.52 pence at 5pm on Friday.

The kiwi may trade between US82.34c and US82.94c today, Sinton said, with further declines likely.