The greenback continued its upward trajectory overnight coinciding with a strong equity market performance with the DOW finishing up over 100pts. The US dollar index which measures the dollar's value relative to six major foreign currencies is currently up 0.5 per cent to 77.46.
Sterling rocketed to highs of 1.6458 as UK Consumer Price index surpassed estimates to record 0.6 per cent growth for the month of December, representing an annual growth rate of 2.9 per cent. Another key measure of inflation the Retail Price index also recorded 0.6 per cent jump in December, annually represent a 2.4 per cent rise. We also saw some strength from the pound on the news of Kraft Foods takeover of Cadbury Plc, but failed to maintain the momentum slipping to current levels of US$1.6360.
Across the channel economic sentiment in Europe has suffered another blow, with the ZEW survey losing ground to record a level of 46.4 in January against a previous level of 48. The German economy mirrored the Euro-Zone to record a drop to 47.2 from 50.4 in December. Fears of an economic meltdown in Greece also pressured the Euro falling to lows of US$1.4252 overnight.
The Canadian dollar also lost ground against the greenback, as the Bank of Canada kept benchmark interest rates at a record low of 25 bps with the Bank also reaffirming interest to remain at current levels until June 2010.
Strong commodity market activity overnight failed to ignite Aussie dollar strength but certainly remained a primary supporting factor. Throughout offshore trading the local unit fell to lows of 91.75 US cents, before a resurgence to current levels of 92.5 US cents.
The Westpac Consumer Confidence will be released at 11:30 AEDT, we expect a positive result with a reasonable amount of upside on the Aussie given a better than expected reading.