Australian Dollar: With yesterdays Australian unemployment rate coming in on expectations and unchanged at 5.8% local investors took the opportunity to take profit on long AUD positions. Casting some doubt over the figures was the change in seasonally adjusted estimate of full time employment decreased by almost 31k jobs prompting a move lower in the AUD/USD which was trading around 0.8630 at the time of the release. Offshore markets continued the theme pushing the Aussie dollar to an eventual low of 0.8545 before demand once again re-emerged. This morning sees it open back at 0.8630 after concern about the massive U.S trade deficit triggered a bout of Greenback selling whilst equity markets in the region finished strongly once again.
- We expect a range today in the AUD/USD rate of 0.8575 to 0.8675
Great Britain Pound: The Pound Sterling initially weakened to 1.6480 against the Greenback during London exchange before roaring higher to open this morning at 1.6650. As expected the Bank of England kept interest rates on hold at 0.5% maintaining its commitment to the 175 billion GBP asset purchase plan. The news gave the market confidence in the Sterling and coupled with broad based Greenback weakness the GBP/USD hit an overnight high of 1.6685. The move higher helped the cross rate which opens this morning at 1.9290 after having peaked at 1.9420 during early U.S trade.
- We expect a range today in the GBP/AUD rate of 1.9200 to 1.9350
New Zealand Dollar: Despite a brief dip to 0.6920 the Kiwi maintained its remarkable run higher to open this morning back above the psychological 70 cent mark at 0.7035. Offshore investors continued to pursue the high yielder with the Dow Jones closing up almost 1% and concerns about the U.S trade deficit putting a dampener on the Greenback. It is uncertain what could transpire to curb enthusiasm for the NZD given the economies poor economic state and repeated comments from officials on the adverse effects on the higher currency.
- We expect a range today in the NZD/USD rate of 0.6980 to 0.7080
Majors: The Euro drifted lower in early offshore traded dropping from 1.4580 to 1.4520 holding this range with little in the way of top tier European economic data for direction. The volatility increased during U.S trade however with the release of North American data in the form of jobless claims and trade balance. Whilst the short term employment trend continued with another fall in jobless claims it was the big rise in the trade deficit that caught the market's attention. Forecasts were for further widening in the gap to around 27.3 billion USD however the 32 billion dollar deficit cast doubts over the prospects for the Greenback amidst persistent talk of a move away from the currency as the global benchmark. The big dollar weakened against the majors falling to 1.4610 and 91.65 against the Euro and Yen and opens this morning near these lows. In other news as expected the Bank of Canada kept interest rates on hold at 0.25% with the loonie as it is referred to ral lying from 1.0780 in late Asia to peak at 1.0880. The move was relatively short lived however as it plummeted following the U.S trade data and the BoC announcement to open this morning on its lows at 1.0770.
- AUD: No Data Expected today
- NZD: Aug Food Prices
- USD: Aug Import Price Index, Jul Wholesale Inventories & Sep prelim Uni of Michigan Confidence
- GBP: Aug PPI
- EUR: No Data Expected today
- JPY: Q2 GDP & Aug Consumer Confidence
- CAD: Jul New Housing Price Index
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