Australian Dollar: The Australian Dollar opens higher than this time yesterday at 0.7646 as the US trade deficit for March came in less-than-expected diminishing demand for safe havens and prompting traders to move back into higher yielding assets. The Federal budget was delivered last night and the Aussie moved to an overnight high of 0.7680 as the Australian Government announced the biggest building program in its history, driving deficits to record levels. The deficit is forecast to reach A$57.6 billion next financial year as the lingering recession erodes tax receipts. Unemployment is expected to rise above 8 per cent. The government will sell a record A$60 billion worth of bonds in the next fiscal year to fund the deficit. Local traders w ill continue to digest last night’s budget in the absence of any data releases today.
- We expect a range today in the AUD/USD rate of 0.7580 to 0.7690
Great Britain Pound: Pound Sterling opens sharply higher against the greenback on Wednesday after a better-than-expected jobs report and signs the UK economy is past the worst of the recent slump. Sterling hit a 4-month high overnight of 1.5352 as the unemployment rose by 57,100 in April for a jobless rate of 4.7 per cent. Many economists had tipped a rise of 85,000. Whilst last night was an optimistic session for the pound, strong resistance at 1.5400 is looming large. Meanwhile, the pound opens slightly higher today against both the Aussie (1.9963) and the Kiwi (2.5223).
- We expect a range today in the GBP/AUD rate of 1.9850 to 2.0050
New Zealand Dollar: The New Zealand Dollar opens slightly higher against the greenback on Wednesday at 0.6058 as the US trade deficit for March came in less-than-expected diminishing demand for safe havens and prompting traders to move back into higher yielding assets. Over the last 24 hours, the kiwi has traded between a low of 0.5960 and a high of 0.6095 and the tone amongst traders is positive at the moment. The RBNZ releases its monthly Financial Stability report today, but this is unlikely to have a major impact on the local currency.
- We expect a range today in the NZD/USD rate of 0.5990 to 0.6120
Majors: The Euro moved higher against the greenback overnight after comments from a European Central Bank board member suggesting that the current level of the main refinance rate is appropriate in the current circumstances. The Euro touched 1.3706 against the greenback overnight, a level not seen since March. The big dollar also eased against the Japanese Yen as the US trade deficit for March came in less than anticipated at US$27.58 billion and investors continue to sell greenbacks as demand for safe havens diminishes. The US Dollar opens today at 96.44, down from an overnight high of 97.82.
• AUD: No Data Due Today
• CAD: Motor Vehicle Sales, March
• EUR: EZ Industrial Production, March
• GBP: Bank of England quarterly Inflation report
• JPY: Trade Balance, March; Machine Tool orders, April
• NZD: No Data Due Today
• USD: Retail Sales, Import Prices, April; Inventories, March
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