AUD
A strong performance in overseas equity markets last week had currencies correlated to risk appetite primed for growth. There were however, diverse movements amongst the currency crosses which were due to mixed data globally. The hawkish announcement in the US on Thursday saw gains in the S&P500 failing to spur demand in the local currency and the continued Greek debt crisis saw the AUD strengthen against the single currency.
The trading floor in heavily traded safe haven currencies was in stark contrast to the single currency last week. The EUR weakened heavily last week as there was still no plan to arrest the Greek debt crisis. Elsewhere, there was an upward revision by analysts of China’s growth despite their increased lending requirements and Japan’s better than expected GDP figure boosted currencies linked to risk sentiment. The US had generally strong economic data, namely Housing Starts (0.59M), Industrial Production (0.9%) and CPI (2.6%), however the Federal Reserve increased the discount rate 25 basis points (0.75%) on Thursday. This announcement weakened the AUD against the Greenback in Thursday’s overnight trade.
There was a vacuum of local economic data last week, with the worse than expected NAB Business Conditions (3) being the key figure. Importantly however, there was a return to interest rate spruiking by RBA Governor Glenn Stevens, who said early in the week that the February decision to keep rates on hold was “finely balanced”. On Friday morning however, as the local currency recovered lost ground from the Fed decision, he was adding weight to speculation of a March rate rise, saying that monetary policy must “be careful not to overstay a very expansionary setting” but that the cash rate was below normal but that it is an “appropriate place to be”.

The week ahead in Australia:
Monday 22nd – New Motor Vehicle Sales.
Tuesday 23rd – Conference Board Australia Leading Index.
Wednesday 24th – Wage Price Index.

AUDUSD
The pairing performed particularly well last week until the Fed rate announcement. The rate opened at 0.8870 and consistently pushed higher to reach a high of 0.9009 on Thursday before closing the week at 0.8885.
The week ahead in the US:
Tuesday 23rd – S&P/Case-Schiller Home Price Indices, Consumer Confidence, Richmond Fed Manufacturing Index, API Crude Oil Inventories, Fed’s Bullard speech.
Wednesday 24th – MBA Mortgage Application, New Home Sales, EIA Crude Oil Stocks.
Thursday 25th – Continuing Jobless Claims, Durable Goods Orders, Initial Jobless Claims, Housing Price Index, Fed’s Bullard Speech.
Friday 26th – GDP, Real Personal Consumption Expenditures, Chicago Purchasing Manager’s Index, Reuters/Michigan Consumer Sentiment, Existing Home Sales.
AUDGBP
The pairing had another strong performance last week, opening at 0.5655 and closing the week at 0.5767.
The week ahead in the UK:
Tuesday 23rd – BoE’s Governor King Speech, BBA Mortgage Approvals.
Thursday 25th – Total Business Investment, CBI Distributive Trades Survey.
Friday 26th – Nationwide Housing Prices, Gfk Consumer Confidence, GDP, Index of Services.

AUDEUR
The pairing was another strong performer, opening the week at 0.6511 and closing the week at 0.6596.
The week ahead in the Eurozone:
Tuesday 23rd – IFO – Current Assessment.
Wednesday 24th – GfK Consumer Confidence (Germany), GDP (Germany), Industrial New Orders.
Thursday 25th – Unemployment Change (Germany), M3, Consumer Confidence, Industrial Confidence.
Friday 26th – CPI, CPI (Germany).
NZD
The New Zealand dollar improved its status as a currency correlated to risk appetite early in the week after the stronger than expected figures from Japan and the strong performance in equity markets ensured the currency had a strong showing. The currency pared back gains from Thursday’s Fed decision however.
The few pieces of economic data released during the week was broadly worse than expected, further easing pressure on the RBNZ to raise interest rates in the first half of this year. The PPI-Output (-0.4%) and PPI-Input (0.3%) were both worse than expected however better than the previous quarter, whilst Credit Card Spending (2.6%) was higher than the previous month.
Mid-week, a major supplier of building materials in New Zealand stated that trade contracts were subdued and that it was highly unlikely that there would be the strong growth that occurred in the Quarter to December. The NZD fell heavily on Thursday after the Fed increased the Discount Rate (0.75%), with continued losses occurring on Friday.

The week ahead in New Zealand:
Thursday 25th – Business Confidence, M3 Money Supply, Building Permits, Trade Balance.
AUDNZD
The pairing opened at 1.2741 and moved upwards from Tuesday to close the week at 1.2791.
GBPNZD
The pairing performed poorly last week, opening at 2.2495 and tracking downwards until Friday morning when it recovered slightly to close the week at 2.2146.
EURNZD
The pairing performed poorly last week, opening at 1.9534 and closing the week at 1.9368.
NZDUSD
The pairing had another volatile showing last week, opening at 0.6950 then reaching a high of 0.7080 levels before closing sharply down at 0.6931.