:: Australian Dollar: The RBA increased interest rates by 0.25% for the third consecutive month taking the official cash rate to 3.75% in a move that surprised some sections of the market. The immediate reaction however saw the AUD/USD retreat from 0.9175 to a low just shy of 91 cents as the accompanying statement seemed to lose some of the previous hawkish undertones. The central banks choice of words, in particular the use of material adjustments to the stance of monetary policy in reference to the last three increases suggests that the cash rate may be approaching neutral territory soon. Offshore markets however snapped up Aussie dollars as confidence in the economic recovery continued, thanks mainly to relatively upbeat European and U.S economic data, taking the AUD back to open this morning around 0.9250.
- We expect a range today in the AUD/USD rate of 0.9225 to 0.9300
:: Great Britain Pound: The Pound Sterling rallied overnight buoyed by stronger than expected housing sector data during the month of November. Nationwide House Prices increased from 2% to 2.7% outweighing any impact from a lower than forecast reading on the Manufacturing sectors Purchasing Manager Index for the same month. The GBP increased from 1.6400 to an eventual high just short of 1.6650 aided by broad based USD selling and opens this morning around 1.6625. The GBP/AUD cross rate opens relatively unchanged at 1.7965 after surviving an overnight dip towards 1.7880.
- We expect a range today in the GBP/AUD rate of 1.7900 to 1.8020
:: New Zealand Dollar: With no New Zealand economic data released over the last 24 hours and nothing scheduled for today the Kiwi has been following sentiment in risk appetite and movements in the Aussie dollar. As such the NZD/USD added almost 2% from its Asian close around 0.7160 to post an overnight high near the 73 cent handle. The basis for the move was a rally in U.S equities which added over 1% after strong European and North American economic data. The AUD/NZD cross rate was volatile following the rate rise in Australia falling from above 1.2800 to trade near 1.2650 overnight before rebounding to this morning's open marginally above 1.2700.
- We expect a range today in the NZD/USD rate of 0.7225 to 0.7325
:: Majors: The Euro bounced back from a late Asian dip to 1.4980 in early offshore trade exchanging as high as 1.5115 against the Greenback during the U.S time-zone. With economic data out of Germany and the broader European region coming in at or above expectations confidence emerged that the global economy will continue to recover in 2010 and the ECB may be the first of the G3 countries to raise rates in the New Year. In other news the USD/JPY roared higher in Asia yesterday following the announcement of a special press conference by the BoJ, gapping from 86.40 to an eventual high around 87.50. The release of the comments by Japan's central bank governor Shirakawa disappointed the market somewhat as expectations were for an expansion in the governments 1.8 trillion Yen government bond purchase program. Instead the central bank announced it will offer three month loans to commercial banks at a 0.1% discount to the current facility, a move that saw USD/JPY fall back towards 86.50. U.S equities rallied over 1% overnight assisting the rebound in risk appetite following better than expected Pending Home Sales and Construction Spending for the month of October, news that outweighed the less than impressive ISM data. Looking ahead tonight's ADP employment data will be closely scrutinised ahead of Friday's U.S employment report with an improvement expected.
:: Data Releases:
- AUD: No Data Expected Today
- NZD: No Data Expected Today
- USD: Nov ADP Employment & Fed''s Beige Book
- GBP: Nov Construction PMI
- EUR: Oct PPI
- JPY: Nov Monetary Base
- CAD: No Data Expected Today