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09 Mar 2016

Its all about the ECB today as the Kiwi takes a tumble

United States Dollar: The US Dollar had a rather flat day yesterday as all eyes are on today’s announcement from the ECB. Later in the afternoon we did see the release of wholesale inventories, it rose by 0.3% in January, increasing by the highest level since last June and halting a three-month streak of negative moves. We was expected to see a slight decline of 0.1% for the month. As a result, the inventory to sales ratio fell by 1.3%, marking its fourth consecutive monthly decline. Today we see the release of unemployment claims where a drop has been forecast, this will be released alongside the ECB press conference so if all goes to the plan the Dollar could be a winner today. Sterling was able to advance yesterday after data showed UK Industrial and Manufacturing output rebounded in January after a steep drop in the previous month. Industrial was up 0.3% but Manufacturing was the big mover, an increase of 0.7% and this coming off a 0.3% dip the previous month, 0.2% was the forecast. Gains were still limited though as the June referendum looms in the background and continues to weigh.

We expect a range today in the GBP/USD rate of 1.4020 to 1.4280

Euro: The Euro is being met with caution at the moment and yesterday was no exception. We traded in tight ranges as investors take up there position and hold off making any major moves. ECB president Mario Draghi has sent strong signals that the central bank will approve further easing initiatives as a means for bolstering economic growth throughout the euro zone and staving off inflation. Analysts from ING have estimated that EUR/USD could fall as much as 1.5% if the ECB approves added stimulus, including raising the total of monthly asset purchases by as much as €5 billion. GBP/EUR currently sits at 1.2950.

We expect a range today in the GBP/EUR rate of 1.2890 to 1.3120

Aussie and Kiwi Dollars: Overnight markets have been taken by surprise after New Zealand’s central bank unexpectedly cut interest rates to a record-low 2.25 percent, triggering a slide in the local dollar. The decision behind the rate cut was owing to low inflation and a deteriorating global outlook. Further pressure was added to the Kiwi too as Moodys rating agency warned of a credit risk to the country’s banks from tumbling dairy prices. Immediately after the release GBP/NZD rocketed from 2.0920 to 2.1415 and has since stabilised. Elsewhere the Aussie felt the effects of the rate cut and it too lost ground against sterling, where it currently sits at 1.9020. Losses were limited in the commodity currencies though as Chinas inflation picked up in February rising 2.3% from a year earlier, a 1.8% increase was forecast.

We expect a range today in the GBP/AUD rate of 1.8900 to 1.9150

We expect a range today in the GBP/NZD rate of 2.1150 to 2.1380

Data Releases

AUD: No data

EUR: Minimum Bid Rate, ECB Press Conference

GBP: No Data

NZD: Business NZ Manufacturing Index

USD: Unemployment Claims

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