:: Australian Dollar: The Aussie dollar traded in a narrow range during Asia yesterday bouncing between 0.9020 and 0.9060 for the majority of the session. For the first time since breaking above 90 cents it dipped back below the key level to exchange as low as 0.8985 before bouncing back to open this morning at 0.9070. Ongoing concern about the longer term prospects for the Greenback and further widening in the interest rate differential continue to support the AUD as it presses higher with today's NAB Business Confidence survey likely to add to the bullish undertones.

- We expect a range today in the AUD/USD rate of 0.9020 to 0.9100

:: Great Britain Pound: The Pound Sterling survived an early sell off to 1.5730 against the Greenback to bounce back to this morning's open marginally above 1.5800. However the market remained nervous about the prospects for the UK economy ahead of this evenings inflation and retail price data. A report highlighting the shift away from the U.S dollar into the Euro as a major reserve currency did little to help the GBP as it continues to underperform against all other currencies. Highlighting the fact is the performance of the GBP/AUD cross rate which traded at 25 year lows of 1.7390 overnight, a trend that appears to have no end in sight at this present time.

- We expect a range today in the GBP/AUD rate of 1.7350 to 1.7450

:: New Zealand Dollar: The Kiwi dollar was dealt with what could be the first of this week's reality checks following a 1.1% decline in September QV House prices. In local trade the NZD/USD fell towards 0.7250 before bouncing back in line with other currencies to open at 0.7330 thanks to another bout of USD weakness. Today's August Retail Sales data is expected to dictate direction in local trade with most economists having forecast a rebound from the previous months -0.5% to a +0.5% result however a more sombre result is likely to trigger another round of selling and a retest of 0.7250.

- We expect a range today in the NZD/USD rate of 0.7250 to 0.7375

:: Majors: The Euro retested Asian lows of 1.4670 against the Greenback overnight following an unexpected drop in the German Wholesale Price Index during September. The index, which is used as a measure on inflation was expected to decline from 0.7% to around 0.3% however the -0.2% result reinforces the need for low Euro-zone interest rates at this point on the economic cycle. The big dollar however came under more selling pressure in holiday thinned U.S trade following a report on Bloomberg highlighting the shift in reserves by central banks away from the USD into EUR and other currencies. According to the story 413 billion U.S dollars or 63% of new cash reserves went into Euros and Yen during the June quarter, the highest percentage in any quarter for an amount above 80 billion. Broad based Greenback weakness saw it decline to 1.4810 and 89.60 against the Euro and Yen respectively ahead of the commencement of the BoJ meeting today and this evening's key ZEW sentiment survey which is expected to add some further support to the Euro.

:: Data Releases:

  • AUD: Sep NAB Business Confidence
  • NZD: Aug Retail Sales
  • USD: Oct 11 ABC Consumer Confidence & Fed speak
  • GBP: Sep CPI & Sep RPI
  • EUR: Oct ZEW Survey
  • JPY: BoJ Meeting
  • CAD: Aug New Housing Price Index & Aug International Merchandise Trade