|Tuesday, 6 March 2012 – Market Commentary by OzForex|
|By Michael Judge|
|Australian Dollar:In official figures released yesterday, company gross operating profits fell a staggering 6.5 percent in the December quarter, well below the majority of forecasts which had tipped inventories to rise by 0.2 percent. In what has been a tumultuous 24 hours for the Australian Dollar, investors found further reason to sell the higher-yielding asset following news flows out of China, Australia’s largest trading partner that their growth target for 2012 has been cut to 7.5 percent, the lowest figure seen since 2004. After trading between a 24 hour range of (1.0655 – 1.0742) against its US Counterpart, the shine has certainly been taken off the local unit as it opens half a cent lower this morning currently swapping hands a rate of 1.0670. Meanwhile today the Reserve Bank of Australia are due to meet this afternoon where its widely anticipated the official cash rate will remain unchanged at 4.25 percent, the highest of any developed economy.
We expect a range today of 1.0590 – 1.0720
New Zealand Dollar:
New Zealand’s Dollar dropped off sharply yesterday amid further signs that the economic outlook for both China and Europe is dimming significantly. With China decreasing there growth outlook for 2012 and signs of further cooling, concerns surrounding a hard-landing for New Zealand’s largest trading partner has seen investors move away from assets deemed riskier in nature over the past 24 hours. As global risk sentiment took a battling so did the New Zealand Dollar which fell from an earlier high of 0.8306 against its US Counterpart to an eventual low of 0.8205, where we find it opening this morning. In what is shaping up as a very busy week with key risk events occurring consistently over the next few days, The Bank of New Zealand are expected to meet on Thursday with any signalling of a future rate cut likely lead to further selling pressures for New Zealand’s currency
We expect a range today of 0.8150 – 0.8250
Great British Pound
In a busy session for the Sterling yesterday, the FTSE 100 Index decreased 0.6 percent whilst European services and manufacturing output also shrank by a larger than forecast amount. Despite global sentiment taking a hammering overnight and a string of disappointing figures out of both China and Europe the Great British Pound has managed to keep its head above water over the course of the past 24 hours opening this morning around 30 basis points stronger against its US Counterpart at a rate of 1.5863. Looking ahead this week the Bank of England is due to meet on Thursday and whilst it is most likely they will keep the current level of asset-purchasing unchanged it still remains a key risk event for the Sterling. Meanwhile this morning The Pound opens noticeably stronger against a weaker Aussie (1.4865) and Kiwi (1.9326)
We expect a range today of 1.4800 -1.4920
US Stocks fell yesterday as the S&P 500 Index recorded its biggest two-day drop in 2012, losing just short of a full one percent. Driving investors away from equity markets, the mood was initially dampened following China’s downward revision in its forecasted growth rate for 2012 with sentiment getting even further battered when American factory orders decreased for the first time in three months. Whilst ISM Non-Manufacturing PMI in the US did manage to provide some support for global markets it was not enough to recapture the ground already lost. In what was an overall bearish session yesterday the 17-Nation Euro managed to hold its ground against its US Counterpart doing well to sustain levels above the 1.32 handle after trading to an earlier low of 1.3159. Whilst in Europe, markets are likely to remain skittish over the coming days with Greece expecting bondholders to accept a one-time offer to write off 100 Billion Euro’s worth of Greek debt in an offer set to expire on the 8th of March. Benefitting from the monumental shift away from anything bearing risk the Greenback continued its recent march forward with the USD/JPY Cross opening well above 81.00 this morning at a rate of 81.420.
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AUD: Current Account, Cash Rate
NZD: No Data Today
JPY: Average Cash Earnings y/y
GBP: No Data Today
EUR: Revised GDP q/q,
USD: No Data Today
This information has been written by Michael Judge of OzForex Pty Ltd (AFSL 226 484). This forex commentary is republished at Forex.com.au as general information only. IMPORTANT : This information has been prepared for distribution over the internet and without taking into account the investment objectives, financial situation and particular needs of any particular person. OzForex Pty Ltd makes no recommendations as to the merits of any financial product referred to in its website, emails or its related websites.