:: Australian Dollar: Yesterday's release of the RBA board minutes from the November 3 0.25% interest rate rise cast some doubt as to the scale of the current wave of Monetary Policy tightening. In the minutes the central bank said ...further gradual adjustment in the cash rate would most likely be appropriate over time, though the pace of the adjustment remained an open question. The market had been looking for more aggressive wording given the hikes already priced in for 2010 and were somewhat disappointed by the rhetoric triggering some profit taking on the AUD in Asian trade. After struggling to break through 0.9380 in the morning session the Aussie dollar drifted lower entering offshore trade around 0.9320. Euro weakness and a slight increase in demand for the Greenback saw the AUD/USD continue to decline, eventually reaching a low around 0.9240 before a late rebound sees it exchanging near 93 cents ahead of Australian Q3 Wage Cost Index data this morning.

- We expect a range today in the AUD/USD rate of 0.9250 to 0.9350

:: Great Britain Pound: Slightly higher than expected October inflation figures for the U.K economy triggered a sharp jump in the GBP/USD in early London exchange. Economists had forecast an increase in the headline CPI figure from 1.1% to around 1.4% with the 1.5% increase sparking a rise to 1.6870. The move was short lived however as a rise was expected and with the BoE already having previously forecast a temporary spike in inflation the impact on central bank policy decisions is likely to be quite minimal at this stage. An increase in demand for the Greenback pushed the Sterling back lower to retest 1.6750 on two occasions overnight, holding twice however to open this morning back around the 1.6800 handle. A lower Aussie dollar helped the cross rate regain the psychological 1.8 level posting an overnight high around 1.8150 and opens this morning at 1.8080.

- We expect a range today in the GBP/AUD rate of 1.8020 to 1.8120

:: New Zealand Dollar: The Kiwi followed its Trans Tasman neighbour the Aussie lower over the last 24 hours losing almost a cent from yesterday's highs of 75 cents against the Greenback. U.S economic data disappointed overnight with PPI and Industrial Production data in particular falling short of economist's expectations triggering a flight back to less risky assets. As a result the Greenback strengthened against most major currencies putting the NZD/USD exchange rate at 0.7445 this morning, up from its overnight low at 0.7405. With no N.Z economic data scheduled for release today trade is expected to be relatively subdued before tonight's much anticipated U.S inflation report.

- We expect a range today in the NZD/USD rate of 0.7425 to 0.7470

:: Majors: The strength of the European economy compared to the rest of the world was evident in last night Trade Balance data for September which showed a turnaround from a 2.3 billion EUR deficit the previous month to a 3.7 billion surplus. Currency markets took little notice of the news however as the focus shifted to the state of the U.S economy with several key data releases disappointing. Producer Prices, Industrial Production and Capacity Utilisation all increased in October however the increases were not as great as what had been forecast by most economists hence some marginal strengthening of the Greenback emerged as investors moved back into safer assets. The big dollar finished the offshore session at 1.4850 and 89.30 against the Euro and Yen respectively with this evenings U.S inflation report keenly anticipated. Analysts are looking for a relatively unchanged +0.2% headline reading on October CPI whilst the core component is expected to increase sli ghtly on an annualised basis from 1.5% to 1.6%.

:: Data Releases:

  • AUD: Q3 Wage Cost Index
  • NZD: No Data Expected Today
  • USD: Oct CPI, Oct Building Permits & Oct Housing Starts
  • GBP: BoE Minutes
  • EUR: Sep Current Account Balance & Sep Construction Output
  • JPY: Oct Machine Tool Orders
  • CAD: Oct CPI

:: Note: The above exchange rates are based on interbank rates. If you are considering a transfer then please login, register or call us for a live dealing rate.

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