Daily Forecast - 31/12/2009

:: Australian Dollar: The Australian Dollar spent the majority of local trade yesterday above the 89 cent mark before a brief bout of profit taking late Sydney time took the Aussie down towards the low 89's. As we entered offshore trade the dollar traded between 0.8920 and 0.8960 on speculation a drop in US stocks would reduce demand for commodity based currencies. This morning sees the release locally of Private Sector Credit for the month of November with the outcome expected not to move the dollar much. With many traders still on their annual holidays, liquidity and FX volumes are expected to remain thin and currencies trading within very tight ranges. 90 cents continues to be the first point of resistance for the Australian Dollar.

- We expect a range today in the AUD/USD rate of 0.8870 to 0.8980

:: Great Britain Pound: The Pound continued to come under selling pressure against a number of currencies yesterday however an upbeat assessment of the UK economy by Prime Minister Gordon Brown propelled the Pound from a low of 1.5825 to 1.6094 overnight. Prime Minster Brown said that Britain is over the worst of the economic slowdowns in living memory, it sent a clear message to the market to buy the Pound. However Mr Brown did also indicate that the road to recovery is still fragile and open to further downside should stimulus measures currently in place not continue. At time of writing the Pound is exchanging at 1.7990 against the Australian Dollar and 2.2295 against the New Zealand Dollar.

- We expect a range today in the GBP/AUD rate of 1.7850 to 1.8050

:: New Zealand Dollar: The New Zealand hovered below the 72 cent mark for most of Asian trade yesterday and like the Aussie slipped in last few hours of Sydney trade to end the local session at 0.7156. The Kiwi traded higher offshore trading between 0.7160 and 0.7228 as a brief return to riskier assets spurred high yielders. With no data out of New Zealand today or for the rest of the week, FX direction will be taken from offshore.

- We expect a range today in the NZD/USD rate of 0.7150 to 0.7250

:: Majors: A positive reading in the Chicago Purchasing Manager Index for December helped the Greenback maintain it recent momentum against the EURO and the JPY though it is marginally down against the Pound. The index (a business activity gauge) showed an expansion in the regional economy with the figure coming in at 60, compared with Novembers reading of 56.1 and now has many believing that the US economy is now back on track to recovery. On release of the data the Greenback gained across the board however it was the Yen that took the biggest hit and we saw the US Dollar appreciate to a intraday high of 92.76. Wall Street finished fairly flat for the penultimate day of 2009 as traders squared their positions before heading into the New Year.

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