:: Australian Dollar: The Australian Dollar climbed to its highest level in 3 weeks overnight as equities bounced upon expectations US corporate earnings will beat estimates. After initially falling to 0.8680 USD following Moody's reduction of Portugal's credit rating and concerns over China the Aussie rallied as risk appetite improved riding the positive wave from Europe. The outlook on commodity prices was upgraded following Alcoa Inc., the largest U.S. aluminium producer, reporting second-quarter sales and profit beating analysts' estimates and forecasting higher global demand for the metal. Ahead of today's Australian consumer sentiment report, the Australian Dollar opens at 0.8830 US.
- We expect a range today in the AUD/USD rate of 0.8775 to 0.8875
:: Great Britain Pound: The Pound rose against the US Dollar, breaking its 3 day losing streak, after British inflation figures exceeded expectations. Core inflation rose 3.1% defying economist estimations of 2.7% stoking speculation that the Bank of England may be forced to raise interest rates sooner than previously expected. Market sentiment continued to improve as the evening proceeded with the successful auction of Greek debt and indications US demand was picking up. The Cable gained as much as 1.5% overnight in the wake of these hot figures. This morning the Pound opens buying 1.5184 US and 1.7190 Aussie.
- We expect a range today in the GBP/AUD rate of 1.7100 to 1.7250
:: New Zealand Dollar: The Kiwi continued its 7 day climb up against the Greenback breaking 0.7200 US overnight. Gains in equities, spurred by Alcoa Inc's sales and profit report, and Greece's sale of debt encouraged investors to buy currencies related to economic growth. Increases in both internal and external demand by US consumers saw the US trade deficit unexpectedly widen in May to its highest level since November 2008 expanding 4.8% to US42.3 billion. The show of strengthen from global economy allows the Kiwi to open at 0.7193 against the US dollar ahead of today's New Zealand housing and retail reports.
- We expect a range today in the NZD/USD rate of 0.7150 to 0.7220
:: Majors: The market consensus view that financing conditions in Southern European economies will remain challenging for the foreseeable future was reaffirmed by Moody's who downgraded Portugal from AA2 to A1 bringing their ratings in line with S&P and Fitch. The move saw the Euro drop below the 1.2550 level reopening the issue of sovereign debt default. Germany's ZEW economic sentiment report delivered a pessimistic view falling from 28.7 to 21.2 however the current conditions gauge significantly improved to 14.6 versus -7.9 in June. Encouraged by excess demand for Greek bonds the Euro pushed to a 2 month high against the greenback topping at 1.2737 US. Underpinning weakness in the Greenback was further widening in the U.S trade deficit and a return to risk with U.S equities rising putting the big dollar at 1.2725 and 88.70 against the Euro and Yen respectively.
:: Data Releases:
- AUD: Jul Westpac Consumer Confidence
- NZD: May Retail Sales
- USD: Jun Retail Sales
- GBP: Jun Claimant Count, Jun Jobless Claims & May ILO 3mth Unemployment Rate
- EUR: Jun CPI & May Industrial Production
- JPY: Commencement of BOJ meeting