:: Australian Dollar: The Aussie dollar opened Monday a nervous note with local investors unsure if the week ahead could see the beginning of a reversal of the recent strong run higher. As Australian equity markets traded in the red so too did the AUD/USD drifting lower from 0.9165 to retest Friday's offshore lows around 0.9120. Support once again held and comments reinforcing interest rate rises, this time from the RBA governors' assistant Philip Lowe spurred another rally which saw the AUD/USD exchanging back at 92 cents in Europe. With U.S equities trading higher the Aussie continued its run overnight exchanging back above 0.9250 to open this morning near its highs around 0.9275. Today's release of the RBA board minutes where rates were increased by 0.25% to 3.25% are likely to keep the AUD well supported with the market looking for clues on the size of future rises.
- We expect a range today in the AUD/USD rate of 0.9240 to 0.9300
:: Great Britain Pound: The Pound Sterling maintained its recent uptrend bouncing back from an early offshore dip to 1.6240 against the Greenback, posting an eventual high near 1.6420. Several economists have recently upgraded 2010 growth forecasts for the U.K strengthening the GBP/USD considerably from last weeks lows near 1.5700. U.S investment house PIMCO is the latest to follow suit overnight calling for positive Q4 economic growth. This morning sees the GBP open at 1.6370 and 1.7635 against the USD and AUD having roared to an overnight high near 1.7900 on the GBP/AUD cross.
- We expect a range today in the GBP/AUD rate of 1.7580 to 1.7680
:: New Zealand Dollar: A strong reading on the New Zealand Performance of Services Index for the month of September helped underpin support for the Kiwi dollar in local trade yesterday as it held above 0.7350. A rally in the Aussie dollar following more bullish comments from the RBA helped the NZD higher to exchange back around 0.7450 in late afternoon trade. Offshore markets continued the theme with U.S dollar weakness re-emerging once again taking NZD/USD back above 75 cents for the first time since July 2008 to open this morning on its highs at 0.7540.
- We expect a range today in the NZD/USD rate of 0.7485 to 0.7585
:: Majors: The Euro recovered some lost ground against the Greenback in offshore trade overnight revisiting last week's highs near 1.4965 to open this morning at 1.4945. Better than expected U.S Company earnings helped propel North American equity markets higher with investors ignoring an unexpected drop in confidence in the housing sector. U.S Federal Reserve Bank chairman Ben Bernanke speaking at the San Francisco Fed Conference highlighted one of the major problems facing the economy calling on the nation to save more by cutting the deficit, in some degree shifting the focus back to government officials. He said the most effective way to accomplish this goal is by establishing a sustainable fiscal trajectory, anchored by a clear commitment to substantially reduce federal deficits over time. The large deficit is one of the main reasons calls for a new reserve currency continue to emanate and will persistently weigh on the Greenback. The weakness in the USD was also evident overnight against the JPY which snapped its recent run higher retracing back to 90.40, well below yesterdays Asian high of 91.12.
:: Data Releases:
- AUD: RBA October Board minutes
- NZD: No Data Expected today
- USD: Sep PPI, Sep Housing Starts & Sep Building Permits
- GBP: Sep Public Sector Finances & Sep Public Sector Net Borrowing
- EUR: Aug Construction Output & German PPI
- JPY: BOJ Deputy Governor Nishimura talks & Forecasts for Sep Machine Tool Orders
- CAD: Bank of Canada Rate Decision, Sep Leading Indicators & Aug Wholesale Sales