:: Australian Dollar: The Aussie dollar retreated in local trade yesterday following the release of the RBA board minutes to the December meeting where rates were increased by another 0.25%. The statement caught the market by surprise, in particular the fact that The question for members was whether it was more appropriate to take a further step at this meeting or to hold the cash rate steady pending a further evaluation of developments at the February meeting, a clear sign the central bank considered leaving rates on hold at the meeting. The news triggered a move lower in the AUD falling from 0.9165 to enter offshore trade around 0.9125 and with an increase in demand for U.S dollars across the board overnight the AUD/USD exchange rate reached an eventual low around 0.9040 in New York. This morning sees it open around 0.9060 ahead of critical Q3 GDP data with consensus forecasts for another positive quarter of around 0.4% economic growth in the Australian economy. 

- We expect a range today in the AUD/USD rate of 0.9000 to 0.9100 

:: Great Britain Pound: The Pound Sterling momentarily spiked to a high near 1.6320 against the Greenback following the announcement of an increase in U.K inflation during November. Economists had predicted a rise from an annual rate of 1.5% to around 1.8% so the 1.9% result was only slightly above consensus forecasts. However, with the headline rate still below the Bank of England 2% target and demand for U.S dollars resurfacing the move was relatively short lived. GBP/USD eventually fell to 1.6205 before bouncing back to open this morning at 1.6265 whilst a weaker Aussie dollar helped the GBP/AUD cross rate rally from 1.7825 to 1.7975. Against the New Zealand Dollar, the Pound has traded in a fairly narrow range of 2.24 to 2.25 for the last 24 hours.

- We expect a range today in the GBP/AUD rate of 1.7885 to 1.8000 

:: New Zealand Dollar: The combination of relatively weak European economic data and a stronger than forecast set of U.S numbers saw a big increase in demand for the Greenback overnight. The news conspired against the Kiwi which fell from an early London high of 0.7265 to briefly trade below the 72 cent level in exchange with the big dollar. This morning sees the NZD exchanging near its lows at 0.7210 against the USD and 1.2550 against the AUD.

- We expect a range today in the NZD/USD rate of 0.7175 to 0.7250 

:: Majors: Softer than expected European economic data in the form of the ZEW sentiment survey and Labour costs instigated a sell-off in EUR/USD overnight, falling from 1.4650 to an eventual low near 1.4500. Adding to the weakness was an increase in demand for the Greenback following the release of inflationary U.S economic data. The Producer Prices Index which measures changes in the selling prices producers charge for goods and services increased by 1.8% in November, well above forecasts for a 0.8% rise. With Industrial Production also coming in higher than expected investors increased bets that U.S officials will begin to scale back stimulus sooner rather than later. USD/JPY rallied from 88.80 to a high near the psychological 90 level with more upside likely ahead of this evening's Consumer price Index and FOMC meeting. 

:: Data Releases:

  • AUD: Q3 GDP
  • NZD: No Data Expected Today
  • USD: FOMC, Nov CPI & Nov Building Permits
  • GBP: Nov Claimant Count & Oct ILO Unemployment Rate
  • EUR: Nov CPI & Nov German Wholesale Price Index
  • JPY: Nov Machine Tool Orders
  • CAD: Oct Manufacturing Sales