:: Australian Dollar: A lower reading in the Unemployment Rate for September yesterday saw the Australian Dollar rally hard in local trade. The market was forecasting a reading of 5.9% however the actual result for September came in at 5.7%, surprisng many and leading to a 1 cent rally in the Aussie dollar. Of particular note was the fact that over 40,600 jobs were added in the month of September, of which 35,400 were in full-time employment. The Aussie hit a high of 0.9030 in local trade before moving higher as we entered the Asian and European as traders bet that the RBA will continue to raise interest rates again next month. A rally in commodity prices (gold passing USD1,050 per ounce level) and a strong lead from Wall street, saw the dollar hit a 14 month high of 0.9088.
- We expect a range today in the AUD/USD rate of 0.9030 to 0.9120
:: Great Britain Pound: The Bank of England annouced yesterday that it would leave the country''s official cash rate at record lows of 0.5% and that the Quantative Easing plan would remain at current levels (GBP175 Billion). News of the annoucement saw the Pound break back above the 1.60 level against the US Dollar with it eventually peaking at 1.6120. Policy makers said that they will continue to monitor the local economy for signs of a recovery before committing to the unwinding of the QE programme. Meanwhile, the Pound is changing hands in Sydney at 1.7707 against the Australian Dollar and 2.1610 against the New Zealand Dollar.
- We expect a range today in the GBP/AUD rate of 1.7500 to 1.7850
:: New Zealand Dollar: The New Zealand Dollar tracked almost in tamden with its trans Tasman rival yesterday, breaking through the 0.74 cents level on news of a better than expected release of Australian Unemployment reading. The demand in high yielding currencies continues to be the dominant theme in the FX markets at the moment and this appetite does not appear to be abating anytime soon. Comments from NZ Finanace Minster Bill English in London late Wednesday that the Kiwi Dollar was currently trading at uncomfortable levels and would threaten an export-led recovery did little to dampen demand. In offshore trade the Kiwi moved between 0.7370 and 0.7452, maintaining its advantage of being the best performing currency in the past 3 months.
- We expect a range today in the NZD/USD rate of 0.7370 to 0.7470
:: Majors: As expected the European Central Bank left its official cash rate on hold at 1% overnight however it was the accompanying statement by President Trichet that gave the EURO a boost with it eventually touching a 2 week high of 1.4816. Trichet said that current interest rate levels in EuroLand were appropriate and he expected to see a period of stabilization and gradual economic recovery over the next several months. On the data front, German Industrial Production for the month of August came in almost on par with expectations but this had marginal impact on EURO direction with it trading in a 1 cent range (1.4716 - 1.4816) for most of the European and US sessions. Across the Atlantic, Initial Jobless Claims for the first week of October (forecast of 541K) came better than expected at 521K and despite a strong finish to Wall street, the Greenback is still weak against the majors.
:: Data Releases:
- AUD: No data releases
- CAD: Unemployment Rate (SEP); Business Outlook Survey (Q3)
- EUR: German CPI (SEP); German Trade Balance (SEP)
- GBP: Producer Price Index (SEP); Trade Balance (AUG)
- JPY: Machinery Orders (AUG)
- NZD: No data releases
- USD: Trade Balance (AUG); Fedspeak -President Hoenig