:: Australian Dollar: An increase in the Australian Conference Board leading index from 0.1% to 0.3% during the month of May added some underlying support to the Aussie dollar in Asia yesterday as it held firm above the 90 cent handle etching out gains to enter offshore exchange at 0.9025. The AUD/USD moved above 0.9050 overnight before sellers stepped in to take profit on the move ahead of today's critical Australian second quarter Consumer Price Index report. Although headline inflation is expected to come in well above the 3% mark the market will closely scrutinise the RBA's preferred measures, the trimmed and weighted means which strip the result of the more volatile components and concentrate on core inflation. Analysts are expecting an increase in inflation and as a consequence have been pricing in a rate rise next week when the central bank meets which does leave the Aussie dollar open to some downside below this morning's open at 0.9010 should the result come in below forecasts for an annual rate of 3.4% (headline) or 3% (trimmed mean).

- We expect a range today in the AUD/USD rate of 0.8925 to 0.9075 

:: Great Britain Pound: With the market keen to buy Pounds the release of a massive increase in the CBI Realised Sales index from -5 to 33 (expectations of a rise to 2) triggered another rally in the GBP/USD exchange rate. Following the announcement the cable jumped from 1.5450 1.5575 before pulling back slightly after it was revealed that the Confederation had changed its calculation formula for this release. Nevertheless disappointing U.S consumer confidence figures saw the Greenback weaken taking the GBP to this morning's open on its highs just shy of 1.5600 at 1.5590. With the AUD holding steady ahead of this morning's inflation report the cross rate opens higher as well exchanging around the 1.7300 handle in what promises to be a volatile trading day on the GBP/AUD cross.

- We expect a range today in the GBP/AUD rate of 1.7225 to 1.7425 

:: New Zealand Dollar: The Kiwi was dragged higher by EUR/USD strength overnight pushing to 0.7395, its highest level since January. A strong confidence survey out of Germany was in stark contrast to the U.S Conference Board's consumer sentiment index which fell to a five month low helping EUR/USD and NZD/USD remain firm. Selling late in the North American session sees the NZD open today back at 0.7320 ahead of the release of the NBNZ Business Confidence Survey and the Australian CPI report which will dictate direction in local trade. 

- We expect a range today in the NZD/USD rate of 0.7250 to 0.7375 

:: Majors: After hovering around the 1.3 handle in Asia yesterday EUR/USD rallied to a high of 1.3045 during the European trading day following the announcement that consumer confidence in Germany, as measured by the GfK survey increased from 3.6 to 3.9, its highest level in 8 months. Adding momentum to the move was demand for the EUR/JPY cross which pushed through technical resistance at 113.50 dragging USD/JPY higher with it as well. The Yen weakness permeated through the market and the Greenback benefited climbing from 87 to within a whisker of 88. Consumer confidence in North America recorded a lower than expected reading for July coming in at its lowest level for five months putting a dampener on the Dow Jones Industrial Average however it did still manage to etch out some small gains finishing the session 12 points higher. This morning sees the big dollar open in Asia back at 1.2995 and 87.85 against the Euro and Yen respectively ahead of this evenings key U.S data releases. 

:: Data Releases:

  • AUD: Q2 CPI
  • NZD: Jul NBNZ Confidence Survey
  • USD: Jun Durable Goods & Fed Beige Book Report
  • GBP: BoE Governor Testimony
  • EUR: Jul Prelim German CPI
  • JPY: BoJ Kamezaki Speaks & Jul Small Business Confidence

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