:: Australian Dollar: The Aussie dollar traded lower in local trade yesterday weighed down by continued weakness in equity markets and a slide in the Euro. After holding onto support at 0.6580 in afternoon exchange offshore investors took it lower again following more large falls in U.S equities to open this morning on its lows at 0.6480. The much anticipated Obama inauguration rally failed to materialise as the stark reality of more losses in the financial sector hurt risk appetite once again. Today sees the release of the Westpac and Melbourne Institute consumer confidence survey for January with the result not likely to have any lasting effect on the Australian dollar which is expected to continue to come under selling pressure in Asia today.
- We expect a range today in the AUD/USD rate of 0.6410 to 0.6510
:: Great Britain Pound: Concerns over the U.K banking system continue to weigh on the Pound Sterling and last nights economic data did little to build confidence in the performance of the broader economy. Inflation during the month of December declined by 0.4% taking the annual rate to 3.1% which is its lowest rate since 1997, but still above the upper band of the Bank of England's 2% target for price stability. With inflation however being less of an issue, for the time being, the market focused on a 1.4% drop in the Retail Price Index over the same period and large losses in equity markets. The GBP crashed to its lowest level since mid 2001 exchanging as low as 1.3860, 3% lower than the Asian close marginally above 1.4300 despite the U.K government formalising plans to support the banking sector. After a sharp drop to 2.0950 during early London exchange the GBP/AUD cross rate bounced back to momentarily trade within a whisker of 2.1500 and opens this morning on its highs at 2.1480.
- We expect a range today in the GBP/AUD rate of 2.1350 to 2.1550
:: New Zealand Dollar: Yesterday's New Zealand inflation data triggered an immediate sell off in the Kiwi dollar which dropped from 0.5420 to 0.5350 in quick fashion. The 0.5% decline during the fourth quarter of 2008 was the largest quarterly drop in 10 years taking the annual rate to 3.4%, lower than some forecasts of CPI at 3.6%. In offshore trade the NZD continued to be punished as financial stocks and equities in general came under strong selling pressure to open this morning on its lows at 0.5185. Today sees the release of New Zealand Retail Sales data which is also likely to keep a lid on any attempted rallies in Asia today.
- We expect a range today in the NZD/USD rate of 0.5110 to 0.5210
:: Majors: A better than expected ZEW economic sentiment survey for Germany and broader Europe failed to support the Euro in overnight trade as it continued to weaken against the Greenback and Japanese Yen. Early London took EUR/USD below 1.3000 with the remainder of the offshore session spent drifting lower to open this morning at 1.2880. Despite the inauguration of President Obama U.S equity markets plummeted with financial stocks the hardest hit following in the footsteps of the U.K banking sector with the Dow losing 4%. With risk aversion in focus USD/JPY dropped from its early European highs near 91 to reach a low of 89.70 in early morning trade whilst the EUR/JPY cross rate reached 115.50, its lowest rate since October last year. In other news the bank of Canada cut its official interest rate by 50 basis points from 1.5% to a record low of 1% yet USD/CAD held on to 1.2530 to post a high of 1.2685 in overnight trade.
:: Data Releases:
• AUD: Jan Westpac-MI Consumer Sentiment
• NZD: Nov Retail Sales
• USD: Jan NAHB Housing Market index
• GBP: BoE minutes & Nov Unemployment Rate
• EUR: Dec German Producer Prices
• JPY: Nov Leading Index
• CAD: No data expected today
:: Note: The above exchange rates are based on interbank rates. If you are considering a transfer then please login, register or call us for a live dealing rate.