:: Australian Dollar: The Aussie broke past 0.8850 US early offshore last night after China’s announcement saw commodities prices climb to a five week high. Investors backed the Aussie betting a stronger Yuan would boost demand for the raw material exports Australia heavily relies upon. Support for the Aussie eased after investors calmed down from their initial emotional high evaluating any move by the Chinese would be more gradual. The Aussie opens today lower at 0.8760 US Dollars.
- We expect a range today in the AUD/USD rate of 0.8720 to 0.8810
:: Great Britain Pound: The Pound reached a five week high of 1.4936 against the US Dollar late in Asia after China confirmed it would ease its 2 year currency peg against the Greenback. Markets have interpreted the move as a sign of confidence for the global economic recovery spurring a rally for energy stocks. Overnight the UK’s Rightmove Housing Price index for June grew 0.3% from the previous month. Despite the impressive gains in house prices, demand cooled for the Pound offshore ahead of tonight’s British Budget. This morning the Pound opens buying 1.4760 US Dollars, 1.6850 Aussie and 2.0840 Kiwi.
- We expect a range today in the GBP/AUD rate of 1.6800 to 1.6900
:: New Zealand Dollar: Post China’s announcement for a more ‘flexible’ currency peg the Kiwi, like its commodity-based sisters, rallied brushing 0.7150 US Dollars on several occasions offshore. The Kiwi also reached its highest level in almost three years against the Euro overnight trading at its peak around 0.5770 Euro. The Kiwi came off its 5 week high against the Greenback overnight as China’s revaluation shine started to wear off and Fitch’s downgrade of BNP Paribas pared gains. The Kiwi opens at 0.7080 versus the US dollar this morning .
- We expect a range today in the NZD/USD rate of 0.7020 to 0.7100
:: Majors: The Euro opens today lower at 1.2307 USD after falling for a second day. Prospect of a Chinese Yuan re-evaluation fuelled speculation the economic recovery may strengthen spurring investor demand for growth assets. The Euro found some support around 1.2300 overnight as its decline accelerated after Fitch cut a BNP Paribas SA rating. In Japan, Department and Convenient store sales remained in the red while the All Industry Activity index failed to meet expectations. Demand dampened for Japanese bonds for the first time in 3 days after China’s announcement. An optimistic market saw the USD/JPY rally to 91.46 early offshore. The big dollar opens against the Yen this morning at 91.02.
:: Data Releases: AUD: No data today CAD: CPI, May EUR: German IFO, June GBP: No data today JPY: No data today NZD: Credit Card Spending, May USD: Richmond Fed Manufacturing Index, June