:: Australian Dollar: The strength of the Australian economy was evident once again yesterday following the release of a much stronger than forecast 1.2% rise in Retail Sales during January adding some support to the AUD/USD in early Asian trade. The news was tempered somewhat however with an unexpected 7% decline in Building Approvals for the same month keeping the Aussie dollar capped around the 90 cent mark heading into the RBA rate announcement. Australia's central bank raised the official cash rate by 0.25% to 4% after keeping rates on hold the previous month sparking an immediate spike above 90. The move proved short lived however as the news was factored in by many traders with long positions being squared after the release. Offshore markets resumed the rally taking the AUD/USD back up to 0.9050 as the U.S dollar lost ground across the board with confidence returning amidst the expectation of new deficit reduction measures from Greece. Today sees the release of Q4 GDP data out of Australia with economic growth expected to have increased from 0.2% to around 0.7%.
- We expect a range today in the AUD/USD rate of 0.8985 to 0.9085
:: Great Britain Pound: The Pound Sterling found some respite overnight with a weaker Greenback helping arrest the recent slide in the Cable. Investors shrugged off a mildly disappointing purchasing manager's report for the U.K construction industry, instead pinning their hopes on an impending announcement of a new deficit reduction package out of Greece in the next 24 hours. Support at 1.4850 held in early London exchange with the subsequent bounce taking GBP/USD back towards 1.5 as it opens this morning at 1.4965 whilst the GBP/AUD cross rate continues to struggle exchanging around 1.6550 in early Asia.
- We expect a range today in the GBP/AUD rate of 1.6475 to 1.6625
:: New Zealand Dollar: The announcement of an interest rate rise in Australia added some initial support to the Kiwi around 0.6980 U.S dollars however buying interest waned during late Asian afternoon exchange and the NZD/USD entered offshore at 0.6960. After dipping to a low of 0.6925 in Europe the Kiwi staged a rally back to 0.6980 following a return to risk and gains in EUR/USD. The AUD/NZD cross rate continues to garner plenty of interest trading within a whisker of 1.3 to open this morning near the highs at 1.2975 as the AUD/USD continues to edge higher whilst the NZD/USD remains relatively range bound around 70 cents.
- We expect a range today in the NZD/USD rate of 0.6925 to 0.7000
:: Majors: The Euro made a new low overnight exchange at 1.3435 against the Greenback with inflation in the Euro-zone dropping from an annual rate of 1% in January to 0.9% in February. Support held however better than expected producer prices gave the Euro a boost along with the likelihood of the announcement of further budget cuts by Greece possible as early as tomorrow. The big dollar weakened across the board following the return to risk with EUR/USD finishing at 1.3600 and USD/JPY at 88.65 with the latter trading at its lowest level in 2010. With no meaningful U.S economic data released overnight it was a relatively subdued North American session as investors eye Friday's employment report for an update on the state of the economy.
:: Data Releases:
- AUD: Q4 GDP & AiG Performance of Service Index
- NZD: No Data Expected Today
- USD: Feb ISM Non-Manufacturing Composite & Fed Beige Book
- GBP: Feb Official Reserves
- EUR: Jan Retail Sales & Feb forecast PMI Services
- JPY: Jan Labour Cash earnings