OzForex Daily Commentary - 19/11/2009

:: Australian Dollar: Third quarter Wage Cost Index data came in right on expectations increasing by 0.7% for the quarter and 3.6% on an annualised basis keeping the Aussie between 0.9290 and 0.9320 during morning trade. A story on Bloomberg quoting Chinese Central Bank adviser Fan Gang, who also heads the National Institute of Economic Research, as saying double digit growth in China would not be good as it poses a risk of promoting a property and commodity market bubble put a dampener on the AUD. With Chinese economic growth so important to the Australian export sector and the economy in general the story prompted some nervous investors to sell down the AUD/USD which fell to an eventual low of 0.9265 in Asian afternoon trade. In o ffshore exchange however it rallied back above the 93 cent handle maintaining its recent range to open this morning hovering around these same levels.

- We expect a range today in the AUD/USD rate of 0.9250 to 0.9330

:: Great Britain Pound: The release of the Bank of England Minutes from the November 5 meeting left the market, like the central bank, undecided. It was revealed that policy makers were split three ways between extending the bond purchase program by 25 billion Pounds, 40 billion Pounds and lowering the deposit rate on bank reserves. In the end the BoE decided it needed more information in order to base any decision so nothing was changed. Reaction to the release saw an initial swing in GBP/USD down to 1.6765 and then back up to 1.6845 with the currency pair then settling back around 1.6810, the same levels prior to the announcement. It took a rebound in the Greenback later in the evening to move the Cable out of its range with the GBP/USD opening this morning at 1.6740 and the GBP/AUD cross rate at 1.8020.

- We expect a range today in the GBP/AUD rate of 1.7975 to 1.8075

:: New Zealand Dollar: The Kiwi survived an Asian afternoon selloff to 0.7430 following concerns surrounding a possible price bubble in China to rally higher in Europe overnight. Leading into the U.S inflation report NZD/USD retested resistance at 75 cents only to fail as Greenback demand re-emerged. With U.S inflation coming in only marginally above expectations North American equity markets finished slightly in the red putting a dampener on the Kiwi rally as it opens this morning back at 0.7450.

- We expect a range today in the NZD/USD rate of 0.7425 to 0.7475

:: Majors: A move in the European Current Account from a surplus in August to a deficit in September went relatively unnoticed by currency markets overnight with the Euro strengthening to 1.4990 against the Greenback. All eyes were on the Bank of England minutes and the impending U.S economic releases in the form of CPI and Housing data with the latter somewhat disappointing analysts. Both Housing Starts and Building Permits came in below forecasts for the month of October however inflation came in slightly higher than predicted over the same period. With headline CPI coming in at +0.3% vs expectations of +0.2% and the core component also rising +0.2% vs +0.1% forecasts there is some evidence that the U.S consumer is re-emerging, albeit at a very slow pace. The result gave the market some confidence, especially after the strong Retail Sales figures earlier in the week, that the North American economy has seen the worst of the financial meltdown and is on a slow path to recov ery. The news gave USD/JPY a boost from its overnight lows near 89 to finish the offshore session on its highs near 89.50.

:: Data Releases:

  • AUD: Aug Average Weekly Wages
  • NZD: No Data Expected Today
  • USD: Oct Philadelphia Fed & Oct Leading Indicators
  • GBP: Oct Retail Sales & Oct Publis Sector Net Borrowing
  • EUR: No Data Expected Today
  • JPY: Sep All Industry Activity Index
  • CAD: Sep Wholesale Sales & Oct Leading Indicators

:: 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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