Daily Market Report 23/04/2014

AUD

Australia’s dollar fell against its 16 major peers after data showed the nation’s consumer prices increased less than economists forecast.

The Reserve Bank of Australia said this month inflation is expected to stay consistent with its target over the next two years. It targets average annual inflation of 2% to 3%

China’s yuan touched the weakest level in 16 months, while the Australian dollar headed for its biggest drop in more than a month after a private report signalled manufacturing contracted in the world’s second-biggest economy.

USD

The dollar was near a two-week high against the yen before U.S. data on manufacturing and new home sales that may add to signs the economy is improving. The central banks in the U.S. and Japan will set policy next week.

GBP

The pound rose to the strongest level in seven weeks against the euro due to speculation the Bank of England minutes tomorrow will show policy makers are moving closer to raising borrowing costs.

Sterling approached the highest in more than four years versus the dollar due to signs Britain’s economy will continue to expand at a faster pace than previously expected.

A report last week showed the unemployment rate fell to 6.9%, the lowest in over four years. Carney previously said 7% unemployment would be a threshold for considering an interest rate increase.

INR

India’s rupee fell to a four-week low on speculation importers stepped up dollar purchases to meet month end payments.

The rupee fell for a second day as exchange data showed foreign funds sold a net $1.2 billion of Indian bonds this month through Monday.

The rupee’s losses will probably bottom out as exporters send back overseas income to take advantage of a favourable exchange rate, boosting the value of overseas earnings in local terms.

EUR

Both the services and manufacturing sectors from both Germany and mainland Europe both expanded beyond market expectations causing the euro to make gains across the board this morning.

Key Announcements: 

14.45pm – USD – Markit Manufacturing PMI (Apr): Expected to increase to 56.

15.00pm – USD – New Home Sales (Mar): Expected to increase to 450,000.