:: Australian Dollar: The Aussie dollar held firm in local trade yesterday despite a massive and unexpected turnaround in the countries trade balance. Analysts had been expecting some contraction in the trade surplus from 2.3 billion AUD to around 1.7 billion however the trade balance swung into a deficit of 91 million AUD, catching economists by surprise. The news was not enough to push the AUD/USD back below intraday support at 0.7980 and it pressed higher in early offshore exchanges, peaking at 0.8085 in Europe. The volatility continued however with the shock news that the much anticipated 19.5 billion USD bid for Rio Tinto by Chinalco had fallen through, sparking an immediate drop in the Aussie dollar with the losses extending momentarily as far as 0.7880. The move was relatively short lived however as a general mood of positive sentiment returned following the ECB and BoE announcements triggering swift bounce back to this mornings open of around 0.8020.

- We expect a range today in the AUD/USD rate of 0.7950 to 0.8080

:: Great Britain Pound: The Bank of England left the benchmark interest rate at its record low of 0.5% overnight in a move that had been widely anticipated by economists and analysts alike. The central bank governor King reaffirmed its intention to buy 125 billion GBP of bonds with no apparent plans to increase the amount of money printing and with some tentative signs of improvement in the economy strategy may come under review before too long. The Cable fell swiftly from its highs above 1.6400 after an unsubstantiated rumour emerged that UK Prime Minister Gordon Brown had resigned sending GBP/USD to 1.6100 in quick fashion. This morning sees the Pound open at 1.6175 against the big dollar and 2.0150 Australian dollars.

- We expect a range today in the GBP/AUD rate of 2.0020 to 2.0220

:: New Zealand Dollar: The Kiwi experienced what is referred to by chartists as a “double top” at 0.6375 with resistance at this level tested twice only to fail to advance any further on both occasions. After failing on its second attempt during early European trade the NZD followed the Euro and AUD lower swiftly dropping to an overnight low of 0.6220. Some better than expected U.S economic data helped risk appetite improve in late trade and the NZD opens this morning back at 0.6340 and 1.2630 against the U.S and Australian dollars respectively. Currency markets are now keenly anticipating tonight's U.S employment reports with the unemployment rate tipped to break through 9%.

- We expect a range today in the NZD/USD rate of 0.6275 to 0.6375

:: Majors: As expected interest rates remained on hold in Europe, the UK and Canada last night with none of the central banks adjusting lending rates. With such a large amount of stimulus already injected into the economy ECB President Trichet who has been reluctantly reducing rates over recent months said rates were “appropriate”. He dismissed the possibility of any plans to add to the 60 billion Euro purchases of bonds announced last month and went on to add that “after a stabilization phase, positive quarterly growth rates are expected by mid-2010”. EUR/USD took a dive after the announcement falling from a early high of 1.4235 to 1.4070 as the central bank also downgraded GDP forecasts for the remainder of this year to -4.6% and -0.3% in 2010. In other news overnight Unit Labour Costs and Non-farm Productivity out of the U.S both increased more than expected which could be attributed to the fact many companies have drastically cut staff numbers. Equ ity markets in the region stabilised somewhat finishing in slightly positive territory with the big dollar finishing the offshore session at 1.4190 and 96.55 against the Euro and Yen respectively. The main piece of data capturing everyone's attention at the moment is this evenings U.S payroll data with many analysts expecting a loss of around 520k jobs in May slightly down from the 539k losses the previous month.

:: Data Releases:

  • AUD: May Ai Group Performance of Construction Index
  • NZD: No Data Expected today
  • USD: May Non-Farm Payroll, May Unemployment rate & May Average Hourly Earnings
  • GBP: May PPI Input & May PPI Output
  • EUR: No Data Expected today
  • JPY: No Data Expected today
  • CAD: May Employment