:: Australian Dollar: Commodity currencies rallied on Friday, with the Aussie advancing to a new monthly high reaching 0.8712 USD. Europe’s plan to introduce a stress test for their banks improved risk appetite and certainly helped push the Australian Dollar. Furthering the global economic outlook, the Chinese have announced they will abandon the 6.83 Yuan peg against the Greenback and allow the Yuan ‘increased flexibility’ as China adjusts towards a consumption driven economy. “The recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability,” the People’s Bank of China said. This morning the Aussie opens just beneath US88 cents.
- We expect a range today in the AUD/USD rate of 0.8720 to 0.8850
:: Great Britain Pound: The pound begins the new week steady against the greenback at 1.4850. Positive economic data on Friday helped lift the pound to a 5-week high of 1.4885. A mortgage lending report from the Bank of England showed that loan approvals increased by 51,000 in May compared to 48,000 the previous month. The gains may be short-lived however as the market awaits this week’s emergency UK budget and there are concerns that drastic spending cuts may hamper the nascent economic recovery. Meanwhile, the pound opens lower against both the Australian Dollar (1.6840) and the New Zealand Dollar (2.0830).
- We expect a range today in the GBP/AUD rate of 1.6800 to 1.6900
:: New Zealand Dollar: The New Zealand Dollar opens higher against the greenback on Monday at 0.7110. The kiwi retreated during lack-lustre local trade on Friday down to 0.7017 ahead of an offshore rally above 0.7050 - a one-month high. Stronger commodity prices are supporting the kiwi at present along with improved sentiment towards the 16-nation Euro currency. Positive reaction to recent Spanish bond auctions has soothed concerns about Euro zone finances - at least for the time being. On the cross-rates, the kiwi is trading at 0.8080 against the Australian Dollar and 0.5710 against the Euro.
- We expect a range today in the NZD/USD rate of 0.7050 to 0.7160
:: Majors: The Euro opens this morning at a high of 1.2456 US, a level not seen since May 24th. German Producer Prices surprised jumping 0.3% tripling expectations and moving the Euro to 1.2416 US at the start of European trade. The acceleration in price levels may force the European Central Bank to refrain from any further monetary easing measure. However given the low level of consumer demand in the region, investors hold fast doubts over the regions recovery. Meanwhile the Japanese yen opened this morning stronger at 90.26 after the Japanese government raised its estimate for economic growth to 2.6% this fiscal year.
:: Data Releases: AUD: No data today CAD: No data today EUR: No data today GBP: Rightmove House Prices, June JPY: Industry Activity Index, April NZD: Westpac NZ Consumer Confidence, Q2 USD: No data today