:: Australian Dollar: The Australian Dollar maintained its upward momentum against the Greenback during local trade yesterday, spurred on by an increase in the local equity market and the continuing news that interest rates are tipped to rise in Australia. The market is betting that December will be the month when the official cash rate will be adjusted upwards. Also adding to the Aussie move up was the release by Treasurer Wayne Swan yesterday that the budget deficit came in at A$27.1 Billion for the year ending June 30th compared the May estimate of A$32.1 billion. In offshore trade the dollar traded up in Asian and European trade to reach a high of 0.8760 before falling to a low of 0.8670 on the back of a weaker than expected reading in US Consumer Confidence. In economic news slated for release today all eyes will be on the Retail Sales number for August with the market forecasting a positive reading of 0.5% compared July's surprise negative reading of 1%. This will give a clear indication that the Australian public has confidence in the local economy and that they are willing to part with their hard earned dollars.
- We expect a range today in the AUD/USD rate of 0.8650 to 0.8750
:: Great Britain Pound: The Pound Sterling bounced back from overnight lows of 1.5825 in swift fashion as investors appeared somewhat relieved second quarter U.K economic growth came in on expectations and not worse. The Q2 fall of 0.6% takes the annual GDP to -5.5%, a disastrous result for one the world's largest economies. Despite the strength in the Greenback GBP/USD opens this morning higher at 1.5950 whilst the GBP/AUD cross rate is exchanging at 1.8300 ahead of critical Retail Sales figures out of Australia today.
- We expect a range today in the GBP/AUD rate of 1.8250 to 1.8380
:: New Zealand Dollar: The New Zealand Dollar opens slightly lower today against its U.S. counterpart at 0.7152. NZ Building approvals data for August showed a rise of 2.8 per cent confirming the upward trend that has been in place for almost 12 months. The kiwi reacted positively to the news and firmed towards 0.7180 before rallying strongly in offshore trade to hit an eventual intraday high of 0.7220. A soft reading in US data and weaker finish to the Dow saw the Kiwi down by almost a cent. The kiwi continues to be underpinned by the positive sentiment emanating from equity markets which have rallied early this week. Today sees the release of this month's NBNZ survey of business confidence. The kiwi also remains strong on several of the major cross-rates, most notably against the British Pound (0.4480).
- We expect a range today in the NZD/USD rate of 0.7080 to 0.7180
:: Majors: The Euro drifted lower on profit taking during early offshore trade despite some slightly better than expected economic data. The German import price index gained 1.3% in August, a good sign for demand in the domestic economy whilst confidence indicators for the broader European region showed some slight improvement. The initial rally towards 1.4645 on EUR/USD was met with selling as it drifted to an overnight low of 1.4525 heading into U.S trade. A surprise fall in September Consumer confidence out of North America weighed on risk sentiment with equity markets falling and demand for the Greenback resurfacing. USD/JPY rallied from is early lows around 89.65 to post a high of 90.35 and opens this morning marginally above 90 at 90.10 ahead of August preliminary Industrial Production data.
:: Data Releases:
- AUD: Retails Sales (AUG); Building Approvals (AUG)
- CAD: Gross Domestic Porodct (MoM)(JUL)
- EUR: German Retail Sales (AUG) and Unemployment Change (SEP); Euro Zone CPI (SEP)
- GBP: Index of Services (JUL)
- JPY: Housing Starts (AUG); Tankan - Manufacturing and Industry Index; Retail Trade (AUG)
- NZD: NBNZ Business Confidence (SEP)
- USD: ADP Employment Change (SEP); GDP Price Index (2Q); Fed Kohn to speak in Washington on Exit Policies