:: Australian Dollar: The Australian Dollar climbed almost 1 cent during the local session yesterday despite a weaker than expected reading from the NAB Business Confidence Survey. The survey (a leading indicator of the economic health of local business released on a monthly basis) showed a decline in conditions with the release coming in at 5 compared with the previous months reading of 13. In offshore trade the Australian Dollar moved between 0.8130 and 0.8285 as the effects of the European Sovereign Debt crisis continues to grip the market and the impact it may have on the global recovery story. On the local data front the release this morning of the Westpac Consumer Sentiment report and monthly Home loans are expected to have minimal impact of dollar direction.
- We expect a range today in the AUD/USD rate of 0.8220 to 0.8320
:: Great Britain Pound: The Pound weakened overnight as rating agency Fitch expressed concern about the current level of UK debt and how it would reign in this debt in the foreseeable future. The agency however did not revise the credit rating of AAA for the UK but the comments itself saw the Pound down against the Greenback. The warning came a day after Prime Minster David Cameron told Britons to expect years of spending cuts. In the offshore session the Pound traded between 1.4350 and 1.4475. Against its Southern Hemisphere rivals, the Pound is changing hands at 1.7482 against the Australian Dollar and 2.1681 against the New Zealand Dollar.
- We expect a range today in the GBP/AUD rate of 1.7300 to 1.7500
:: New Zealand Dollar: The Reserve Bank of New Zealand is expected to raise interest rates this morning by 25 basis points from 2.50% to 2.75%. This will be the first increase in the currency in almost 3 years. In offshore trade the New Zealand Dollar traded between 0.6572 and 0.6684 with the market firmly pricing in the rise. It is expected that Governor Allan to make mention that they believe inflation in NZ is starting to gather pace and must be controlled. Yesterdays release of the Manufacturing Sales Index spurred demand for the local un it during the Asian session with the release coming in above expectations at 0.95 (previous 0.7%).
- We expect a range today in the NZD/USD rate of 0.6580 to 0.6750
:: Majors: The Greenback opens steady against the EURO and JPY this morning and at time of writing this report is changing hands at 1.1969 and 91.53 respectively. Adding to the EURO’s movements overnight was some mixed German data. The trade Balance for Germany shrunk from EUR14.1 Billion to EUR13.1 Billion overnight whilst some positive sign in the Industrial Production area saw a 0.2% increase from a previous reading of 0.7% to 0.9%. The data was generally overlooked by some participants as the lingering story of European Sovereign Debt and its effects on future economic growth continue to be the dominant theme. Thursday’s announcement by the European Central Bank and Bank of England (both are expected to keep interest on hold) will be closely looked at with accompanying statements from each to dictate market direction.
:: Data Releases: AUD: Westpac Consumer Sentiment CAD: No data slated for release EUR: No data slated for release GBP: BRC Shop Price Index; Trade Balance JPY: Prelim Machine Tool Orders NZD: RBNZ Interest Rate decision USD: Fed Beige Book