:: Australian Dollar: Yesterday's announcement of a steep decline in housing finance caught the market by surprise somewhat triggering a drop in the Aussie dollar to an intraday low of 0.9130. Any positive effect from the increase in consumer confidence as measured by a monthly Westpac survey was offset by the news that lending in the Australian property sector fell by 7.9% in January, the largest monthly fall in a decade and the second successive drop with December having also dropped by 5.1%. The Aussie dollar held however and found support during offshore exchange following higher than forecast German inflation data and optimism heading into today's Australian employment report with general market consensus pointing to the unemployment rate remaining at 5.3% and around 15k jobs to be added for the month of February. With a positive number expected the Aussie dollar is at risk of pulling back from this morning's open around 0.9150 and should the numbers disappoint initial support around 0.9130 is likely to be tested.
- We expect a range today in the AUD/USD rate of 0.9080 to 0.9180
:: Great Britain Pound: Poor U.K economic data keeps on coming with an unexpected drop in January Industrial Production released overnight. Economists had forecast a slight reduction from 0.5% the previous month to around 0.3% however the -0.4% result saw the GBP/USD retest last week's lows around 1.4870. Support held and the Pound Sterling then rallied following positive German and U.S economic data which saw an increase in confidence the global economy is on a path to recovery. This morning sees the GBP exchanging at 1.4970 and 1.6350 with the cross up from an overnight low near 1.6250.
- We expect a range today in the GBP/AUD rate of 1.6275 to 1.6425
:: New Zealand Dollar: The Kiwi rallied in Asia yesterday following a strong result in the New Zealand Q4 Terms of Trade having increased by 5.7% from a revised 1.6% decline in Q3 2009. NZD/USD jumped from 0.7020 to post a high of 0.7065 and continued its upward path exchanging near the 71 cent handle in late U.S exchange as the market awaited the interest rate decision from the Reserve Bank of New Zealand who have been talking up the possibility of rises in 2010. In early morning trade it was announced that the RBNZ have kept rates on hold at 2.5% sending the Kiwi lower from 0.7075 to a low of 0.7025 at the time of writing. The accompanying media release talked about higher bank funding costs having reduced the level of stimulus and given they expect these costs to persist over the projection reducing the extent of future increases in the OCR the market is scaling back expectations of large rate rises in 2010. At the conclusion of the statement they did however say that continue to expect to begin removing policy stimulus around the middle of 2010 which should provide the Kiwi with some support on any possible dips towards the 68 to 69 cent window.
- We expect a range today in the NZD/USD rate of 0.6950 to 0.7050
:: Majors: In European economic data released overnight the negative effect of a reduction in Germany's trade surplus to 8 billion EUR was offset by an unexpected 0.4% increase in inflation during the month of January. EUR/USD bounced off support below 1.3550 to trade higher for the remainder of the offshore session to open this morning around 1.3650. A 0.2% reduction in U.S wholesale inventories also helped confidence in the markets as diminishing stockpiles helps spur new spending. EUR/JPY and USD/JPY also benefited from the positive risk appetite sending them both higher to open this morning at 123.55 and 90.50 respectively. In Asia today direction is likely to come from the release of Japanese data in the form of Q4 GDP with economic growth in the region expected to have increased a meagre 0.1%.
:: Data Releases:
- AUD: Feb Employment Report
- NZD: RBNZ Rate Decision - Rates on hold at 2.5% & Feb Food Prices
- USD: Jan Trade Balance & Initial weekly jobless claims
- GBP: No Data Expected
- EUR: ECB Monthly Report
- JPY: Q4 GDP