:: Australian Dollar: The Aussie dollar rallied during yesterday's Asian session on the back of an increase in demand for high yielders led by a surge in the Kiwi dollar. Riding on the N.Z dollars coat tails the AUD climbed to an intraday high around 0.8780 retesting last week's highs. Throughout the afternoon and into early European trade the Aussie drifted lower reaching a low of 87 cents prior to the much anticipated U.S Federal Reserve banks announcement on monetary policy. The markets sprang to life following the relatively upbeat assessment of the economic landscape in North America and as such the immediate reaction saw the Greenback weaken and the Aussie rally to retest Asian highs. Once again sellers dominated ahead of 88 cents capping the advances at 0.8780 and with Wall Street finishing in the red the AUD opens trade this morning back around 87 cents.
- We expect a range today in the AUD/USD rate of 0.8635 to 0.8705
:: Great Britain Pound: The Pound Sterling rallied after the release of the minutes to the Bank of England September meeting following what now appears to be unanimous consensus on the way forward. At previous meetings it was evident there was a push by a few members, namely the governor Mervyn King, to increase the amount of asset purchases from 175 billion Pounds to 200 billion. In a spate report the Confederation of British Industry raised its forecast for third quarter economic growth also signalling that the BoE may in fact move towards capping the plan in the foreseeable future. The GBP/USD rallied from 1.6350 but failed to overcome resistance at 1.6460 on two occasions and opens this morning back at 1.6350. The GBP/AUD cross rate opens higher this morning thanks mainly to a slight pullback in the Australian dollar with early exchange around the 1.88 handle.
- We expect a range today in the GBP/AUD rate of 1.8725 to 1.8875
:: New Zealand Dollar: Second quarter N.Z GDP data came as somewhat of a surprise to the market yesterday with the +0.1% number above consensus forecasts for an increase from -1% to around -0.2%. The Kiwi kept its upward momentum from the previous day's trade immediately rallying from 0.7190 to momentarily peak around the 73 cent mark after the release. The NZD held relatively firm heading into offshore trade hovering around 0.7250 ahead of the FOMC meeting and initially rallied following the release to 0.7280 only to pare back any gains. It opens this morning back below 72 cents with the market keen to take profit on long positions at these levels.
- We expect a range today in the NZD/USD rate of 0.7125 to 0.7210
:: Majors: The much anticipated conclusion to the U.S Federal Reserve banks meeting sparked a wild flurry of activity in the Greenback despite interest rates remaining on hold by a unanimous decision at 0% - 0.25% as expected. In its accompanying statement the Fed, as it is commonly referred to, reiterated previous comments that the worst may be over and that economic activity has picked up with activity in the housing sector has increased. The market was however looking for some direction on the quantitative easing program and they got it with the central bank stating that they will gradually slow the spending with completion by the end of the first quarter of 2010. The initial reaction to the release saw a swift rally in the Euro above 1.4800 against the Greenback as investors gained confidence to purchase riskier assets. Equity markets in North America also immediately rallied however the gains were short lived as investors took the opportunity to take profit on what was an over extended intraday rally. The completion of the Fed's program by end of Q1 2010 will raise some doubts in the short term over the longer term prospects for the U.S and global economies; hence it is likely we will see some repatriation back into U.S dollars over coming days. The big dollar opens this morning on its highs against the Euro and 1.4730 and at 91.30 Japanese Yen with more key economic data out of the U.S scheduled for Thursday and Friday.
:: Data Releases:
- AUD: Aug New Home Sales & RBA Financial Stability Review
- NZD: No Data Expected
- USD: Aug New Home Sales, Aug Existing Home Sales & Weekly Jobless Claims
- GBP: No Data Expected
- EUR: Germ Sep IFO
- JPY: Aug Merchandise Trade & Jul All Industry Activity Index
- CAD: No Data Expected