:: Australian Dollar: In what has been a tumultuous 24 hour period the Aussie dollar survived an Asian sell off yesterday to an intraday low of 0.7335 to bounce back in dramatic fashion during offshore trade. A much higher than expected 2.2% increase in Australian consumer spending during March was attributed mainly to the governments most recent handouts and with concern over the capital adequacy of U.S banks intensifying the Aussie dollar came under some selling in local trade. European investors however took to buying the AUD on the dip taking it back to 0.7420 ahead of the U.S open. American investors continued the theme and with better than expected employment data sending equity markets higher the Aussie opens this morning edging towards the 75 cent mark at 0.7480. The local data continues today with April employment expected to indicate another rise in the jobless rate from 5.7% to around 5.9%.
- We expect a range today in the AUD/USD rate of 0.7420 to 0.7510
:: Great Britain Pound: The Pound Sterling received a boost in early London trade with an increase in the Purchasing Managers Index for the services sector rising to an eight month high of 48.7 in April. GBP/USD jumped from late Asian levels around 1.5 to post an eventual top near 1.5150 in late U.S trade with mixed signals coming in the form of better than expected American employment report and concern over the financial heath of the major U.S banks. The Pound opens this morning exchanging hands ahead of tonights BoE meeting at around 1.5120 and 2.0200 with another massive rally in the Aussie dollar weighing on the cross rate.
- We expect a range today in the GBP/AUD rate of 2.0120 to 2.0280
:: New Zealand Dollar: Local markets took little notice of new Zealand Private Wages data released yesterday with the 0.6% increase in the first quarter of 2009 coming in right on expectations. The Kiwi dollar however survived an intraday dip to 0.5750 with late Asian and early European investors keen to snap up the high yielder. In offshore trade the NZD/USD rallied through the 58 cent barrier to post an eventual high of 0.5855 following a surprise result in the U.S ADP employment report which is usually a precursor to Friday's payroll data. Currencies are expected to remain volatile for the remainder of the week with a mix of both offshore events and today's N.Z employment data sure to keep the market on its toes.
- We expect a range today in the NZD/USD rate of 0.5790 to 0.5880
:: Majors: European economic data took a back seat in overnight trade with investors eyeing developments on the U.S banking and employment front. The biggest ever annual decline in European retail sales took a back seat as news trickled into the market surrounding extra funding requirements for American banks. Rumours in Asia yesterday suggested that regulators have told the Bank of America that the company needs to raise around $35 billion in capital based on results of the government''s stress tests was followed by leaked recommendations that Wells Farrgo will need 15 billion. The news kept investors nervous ahead of the official release on Thursday where around 11 of the countries 19 major banks are likely to be forced to tap the market for more capital in order to sure up their balance sheets. On a positive note the ADP employment report showed the U.S economy shed a much less than expected 491k jobs in April against forecasts of a loss of around 645k during the month. Coming ahead of Fridays payroll report the positive employment report was enough to trigger a rally in U.S equities which finished the session up over 1% and providing a boost to risk sentiment. The big dollar finished the overnight session at 1.3330 and 98.30 against the Euro and Yen after having peaked at 1.3265 and 99.05 respectively.