:: Australian Dollar: Yesterday's surprise 0.4% decline in the Producer Price Index did little to curb the markets support for the Aussie dollar around 90 cents as it traded at an intraday high near 0.9075. In European trade overnight the AUD/USD remained range-bound until the supportive comments surrounding Bernanke's reappointment and U.S housing data hit the street. A brief rally towards 91 cents was met with resistance as investors remain relatively nervous about the prospects for equity markets and commodity based currencies. This morning sees the Aussie open around 0.9050 in what is expected to be thin trading conditions given the Australia day public holiday. Volatility is expected to pick up late in the Asian session as the BoJ concludes its meeting and with Australian CPI data scheduled for release tomorrow the AUD is likely to test the resolve of its recent range between 90 and 91 cents.
- We expect a range today in the AUD/USD rate of 0.9000 to 0.9100
:: Great Britain Pound: The Pound Sterling staged a recovery during the U.S trading session overnight rallying from 1.6125 to momentarily exchange above 1.6250 as the Greenback lost momentum late in the session. Analysts are keenly anticipating the release of this evenings fourth quarter U.K economic growth data and with many expecting a vast improvement speculators were keen to snap up the GBP. This morning sees the Pound exchanging near its highs at 1.6235 against the Greenback with the cross rate also higher at 1.7940.
- We expect a range today in the GBP/AUD rate of 1.7880 to 1.8000
:: New Zealand Dollar: The Kiwi benefited from a slightly higher Aussie yesterday drifting from 0.7115 to an intraday high of 0.7165 in what was a relatively lacklustre Asian session. The mood continued overnight as the NZD hovered within a tight 30 point range between 0.7120 and 0.7150 for the majority of the offshore session. This morning sees the NZD/USD open at 0.7140 with N.Z December credit card spending data the only local news scheduled for release. Volatility is expected to pick up late in the Asian day and for the remainder of the week with today's Bank of Japan press conference likely to kick start proceedings.
- We expect a range today in the NZD/USD rate of 0.7100 to 0.7175
:: Majors: EUR/USD dipped to an overnight low around 1.4125 following the release of market research firm GfK's German February consumer sentiment survey. Despite an as expected reading of 3.1 for the month it was January's downward revision from 3.4 to 3.2, due mainly to expectations of an increase in unemployment, which weighed on the Euro. Comments from a senior White House adviser and the Senate's Republican leader that Fed Chairman Bernanke will be re-elected saw a swift move higher to a top of 1.4195 in EUR/USD as investors gained some confidence from the news. Disappointing December existing home sales data out of the U.S triggered some profit taking from intraday players pushing the big dollar back to 1.4150 against the Euro. In other news the Bank of Japan is expected to keep interest rates on hold at 0.1% when it concludes its meeting today with concerns surrounding a stronger Yen likely to have some impact on the central bank's decision. The market will however be looking for a possible expansion in the 10 trillion Yen or 112 billion USD lending program from the ensuing press conference. USD/JPY bounced back from a brief dip below the 90 handle overnight to open this morning near its high at 90.30 with volatility expected to increase in Asia today following the BoJ announcement.
:: Data Releases:
- AUD: Australia Day Holiday
- NZD: Dec Credit Card Spending
- USD: Jan Richmond Fed Manufacturing Index & Jan Consumer Confidence
- GBP: Q4 GDP
- EUR: German IFO Report & Eurozone Nov Current Account
- JPY: BoJ Rate Decision