Daily Forecast - 28/4/2010

:: Australian Dollar: The Australian Dollar opens lower against the greenback on Wednesday at 0.9150. The Aussie drifted lower during yesterday's domestic session after first quarter local producer prices came in higher than expected however the surge in final stage production is unlikely to push the inflation rate above the Reserve Bank's target band of 2 - 3 per cent. First quarter CPI data is scheduled for release today at 11:30am eastern standard time. During overnight trade, the Aussie moved US1-cent lower to this morning's opening level after the debt of Greece and Portugal was downgraded and traders moved away from riskier assets and into the Yen and greenback. Meanwhile, the U.S. Federal Open Market Committee meets tonight and whilst rates are expected to remain on hold, any hints that rates may need to move from current settings could pose some further short-term downside risk for the Australian Dollar.

- We expect a range today in the AUD/USD rate of 0.9100 to 0.9200

:: Great Britain Pound: Pound Sterling (1.5260) opens sharply lower against the greenback after ratings agency Standard & Poor's downgraded Greece and Portugal, stoking fears that indebted European nations are moving closer to default. U.K. stocks fell 2.6 per cent - the biggest drop in 5 months. The pound dropped to an overnight low of 1.5250 as it followed the Euro which plummeted to a 1-year low. Meanwhile, the pound is largely unchanged against the Australian Dollar (1.6660) and higher against the New Zealand Dollar (2.1450).

- We expect a range today in the GBP/AUD rate of 1.6620 to 1.6700

:: New Zealand Dollar: The New Zealand opens sharply lower against the greenback today at US71 cents. The kiwi hit a 3-month high yesterday above 0.7230 on the back of stronger commodity prices and higher yield compared to the United States, Europe and Japan. Profit-takers emerged at these high levels taking the unit back down towards US72 cents during the domestic session. During the offshore session, the kiwi tracked a weaker Euro and Aussie lower after the debt of Greece and Portugal was downgraded and traders moved away from riskier assets and into the Yen and greenback. The Reserve Bank of New Zealand announces the Official Cash Rate tomorrow.?Rates are widely tipped to remain on hold at 2.5 per cent however, the market will be listening closely to the accompanying statement for any clues as to the timing of the next move in rates.

- We expect a range today in the NZD/USD rate of 0.7060 to 0.7130

:: Majors: The Euro hit a 12-month low overnight at 1.3186 after ratings agency Standard & Poor's downgraded the debt of Greece to 'junk' status and Portugal's debt by two notches. The Euro is unlikely to recover in a hurry on fears that other indebted European nations may be tarred with the same brush. The greenback and Japanese Yen both moved higher across the board as traders shunned risk. Meanwhile, the U.S. Federal Reserve is tonight expected to leave rates on hold at the target setting of zero - 0.25 per cent. The market will focus on the accompanying statement for any deviation from the oft-repeated mantra to leave interest rates at exceptionally low levels for an extended period of time

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