Forex Fundamental Analysis Reports

Forex Exchange Morning Report

New Zealand Dollar: NZD takes a break

The NZD traded in a tight 20pt range during our local session with no data to drive it and the market watching anxiously for signs of any RBNZ intervention. With the US celebrating their Independence Day holiday overnight the trend continued, a lack of liquidity in the market seeing the NZD trade in a narrow range of between 0.7809 and 0.7830.

Australian Dollar: AUD gets slight lift from data

The RBA left interest rates unchanged yesterday, a move widely expected by the market which as a result offered little reaction to the news. Australia's trade deficit in May managed to provide a surprise for the market, narrowing in May to AUD $807 million, beating market expectations of $1.2 billion. The AUD rallied following the release, rising from 0.8551 to print an intraday high of 0.8578. The AUD couldn't continue this momentum overnight as a lack of market liquidity saw it range bound between 0.8569 and 0.8586 throughout the off-shore session.
Major Currencies: All eyes on Central Banks tonight

The US Independence Day holiday ensured the USD remained confined to narrow ranges yesterday and overnight, with the only currency movement of note being Sterling; this saw the GBP rally to its third consecutive daily 26-year high in anticipation of an interest rate hike by the Bank of England tonight. The euro also consolidated within a tight range ahead of an interest rate announcement tonight, however rates are expected to remain unchanged.

Overnight News

No US data to report. Independence Day holiday.

Europe services PMI unrevised. The services PMI was unrevised from the flash estimate nearly two weeks ago, but the composite was revised up by 0.1 pt to 57.8 due to Monday's modest upward revision to the flash estimate of the manufacturing PMI. The stronger PMI survey message for June contrasts with some of the other surveys (such as Germany's IFO and ZEW) which were less strong last month.

Euroland retail sales were revised from +0.2% to a modest fall in April, and fell further in May. This points to a sluggish household spending recovery in Q2. Recall that Q1 household spending posted its first decline for more than five years, because of the drag from the German VAT hike in January.

UK services PMI rose to 57.7 in June, arresting its recent downtrend by rising to its highest since January this year. The new business index was particularly strong, and services firms' pricing power seems to have improved. With the construction PMI also much stronger last month, there seems to have been something of a UK economic growth spurt late in Q2 outside of the factory sector (whose PMI was down a little). Bank of England officials will take note of this at their policy meeting today and tonight, although the remainder of today's data was a little less impressive.

Other UK data. The HBoS house price index showed a more modest 0.4% gain in the month than the Nationwide index which jumped 1.1% in June, although the annual growth rates for both are similar, at 11.1% (N'wide) and 10.7% (HBoS). Still on the housing market, the BoE revised down its estimate of housing equity withdrawal in Q4 last year from £14.6bn to £13.3bn and in Q1 it eased to £13.2bn. The other surveys today showed lower consumer confidence and still subdued price inflation on the high street.

Events Today
Country Release Last Forecast
NZ Jun ANZ Commodity Prices NZD 2.7% n/f
US Jun Corporate Layoff Announcements 71k n/f
Jun ADP Private Payrolls chg 97k 103k
Initial Jobless Claims w/e 30/6 313k 310k
Jun ISM Non-Manufacturing 59.7 58.0
Eur ECB Repo Rate Decision 4.0% 4.0%
Ger May Factory Orders –1.2% 1.0%
UK BoE Base Rate Decision 5.50% 5.50%
Can May Building Permits –8.4% 5.6%
Jun Ivey PMI 62.7 63.0

Westpac Institutional Bank