Australian Dollar: The Australian Dollar begins the new week sharply lower against the greenback at 0.8990. After a local session of range-trading on Friday which saw the Aussie move as high as 0.9174, volatility returned offshore as U.S consumer spending fell 0.5 per cent in September as economic stimulus starts to dry up. High yielding currencies came under selling pressure throughout the New York trading session as the data indicated that consumers will make a limited contribution to the recovery without government stimulus. The Aussie hit an overnight low of 0.8978. Should local equities begin the day on a weak note, the Aussie is likely to spend most of today below US90 cents.
- We expect a range today in the AUD/USD rate of 0.8920 to 0.9020
Great Britain Pound: After a strong week against the greenback by recent standards, pound sterling opens lower on Monday at 1.6440 as the market gets nervous ahead of this week's Bank of England meeting. The central bank will announce on Thursday whether it will extend its program of debt purchases aimed at keeping rates low and reviving the economy. During Friday trade, the pound fell from a high of 1.6578 down to 1.6407. Meanwhile, the pound has moved higher against both the Australian Dollar (1.8280) and the New Zealand Dollar (2.2861).
- We expect a range today in the GBP/AUD rate of 1.8150 to 1.8400
New Zealand Dollar: The New Zealand Dollar opens sharply lower today at 0.7189 and has given back all of Friday's gains as risk aversion is back on the table. Like a bad Hollywood romance that is on again, off again, so to the markets appetite for risk fluctuates depending on global economic data releases. U.S consumer spending fell 0.5 per cent in September as economic stimulus starts to dry up. High yielding currencies came under selling pressure throughout the New York trading session as the data indicated consumers will make a limited contribution to the recovery without government stimulus. The kiwi peaked at 0.7335 during local trade ahead of an offshore low of 0.7154.
- We expect a range today in the NZD/USD rate of 0.7100 to 0.7225
Majors: The Euro (1.4725) opens lower on Monday as demand for riskier assets diminished on Friday amid renewed concerns over the state of the global economy. In the United States, high unemployment and the winding back of government stimulus measures, pushed down consumer spending by 0.5 per cent in September - the first fall in five months. It was a steady decline on Friday night for all the high-yielding currencies with the Euro hitting a low of 1.4710. The Japanese Yen also rallied on the risk-aversion theme with USD/JPY falling from 91.57 down to a session low of 89.91. Meanwhile, the Canadian Dollar (1.0840) fell sharply after the government reported that GDP in August fell 0.1 per cent.
- AUD: House price index, Q3
- CAD: No data today
- EUR: EZ PMI, Oct
- GBP: PMI, Oct
- JPY: Labor cash earnings YoY, Sep
- NZD: No data today
- USD: Pending home sales, Sep; ISM Manufacturing, Oct
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