Another day, another fresh 14 month high for the Aussie dollar, which hit highs of $US.9329 overnight, however momentum couldn't be sustained as the US Dollar gained strength on the back of a late sell off in the equity markets. Stronger commodity prices should keep the Australian equity markets well supported which will also be the primary driver of the Aussie dollar in early trade. At the time of writing the Aussie dollar is buying US$.9265.
The pound soared against the greenback overnight as the minutes for the Bank of England October meeting provided a mildly optimistic view of the local economic outlook. Pre-release speculation saw the pound strengthen against the dollar with the final assault in the ensuing minutes of the release pushing the currency through the US$1.65's to highs of US$1.6590. The bank also confirmed the continuance of the Quantitative easing program which will see a total of GBP175b pumped into the economy, ending speculation the program will be prematurely discontinued. Over the last 8 hours the pound has kept a pretty tight range against the greenback, and has failed to lose ground against a late rally on the dollar against other counterparts. Separately, the market also gained confidence as BOE Governor Mervyn King indicated in a newspaper article it would be wise to take into account the possibility of interest rate hikes. The Euro is currently buying US$1.6609.
After a week of testing US$1.5000 the Euro finally overcame heavy resistance pushing through to reach highs of $US1.5047. The release of the Fed's beige book induced the latest burst of investor optimism dragging down the USD to new 14 month lows against the Euro. Although the release of the beige book suggested small and scattered improvements, the overall tone was positive showing an economy regaining composure. The Beige book is a detailed account of the views of analyst, market experts and economist in 12 Federal Reserve districts in relation to the near-term economic outlook and current business conditions.