Australian Dollar: The Australian Dollar opens at US90 cents this morning after another volatile 24 hours. The Aussie hit an intraday high yesterday of 0.9090 on the back stronger gold and commodity prices before a rapid half-cent decline moments before the RBA's 2:30pm cash rate announcement. As expected, the central bank hiked rates by 25 basis points with governor Mr Glenn Stevens saying economic conditions in Australia have been stronger than expected and measures of confidence have recovered. The currency proceeded to gyrate between a low of 0.9020 and 0.9060 during late Sydney before hitting an overnight low of 0.8915 as high-yielding currencies came under pressure once more. Today's retail sales data has implic ations for monetary policy and therefore poses some upside risk for the currency.

- We expect a range today in the AUD/USD rate of 0.8920 to 0.9120

Great Britain Pound: After two days of decline, pound sterling opens largely unchanged (1.6400) against the greenback today. It touched a low of 1.6260 early in the session after Royal Bank of Scotland Group and Lloyds Banking Group announced they will receive GBP31.3bio in a second bail-out by the British government. Sterling hit an intraday high of 1.6454 after a report revealed UK home sales climbed 1.2 per cent in October, higher than economists had forecast. Meanwhile, the pound opens steady against the Australian Dollar (1.8200) and softer against the kiwi (2.2770).

- We expect a range today in the GBP/AUD rate of 1.8080 to 1.8260

New Zealand Dollar: The New Zealand Dollar opens higher today at 0.7195 after another tumultuous session. The kiwi followed moves in the Australian Dollar yesterday and hit a high of 0.7235. The rally was short-lived after economic data revealed that wages growth in New Zealand has moderated to 2.1 per cent in the September quarter. The currency moved lower as the data reinforced the view that the official cash rate can remain unchanged well into 2010. In overnight action, the kiwi traded down to a low of 0.7093 as high-yielding currencies came under renewed pressure. On the cross rates, the kiwi has picked up some ground against the Australian Dollar and opens at 0.7980.

- We expect a range today in the NZD/USD rate of 0.7100 to 0.7280

Majors: The big dollar climbed to a one-month high against the Euro of 1.4626 and moved higher against the Japanese Yen at 90.30 as stocks fell and demand for high-yielding currencies dissipated. Curtailing the recent risk rally has been concerns amongst investors that banking institutions are still shaking off the effects of the financial crisis. In U.S. economic news, factory orders (+0.9 per cent) rose in September for the first time in six months, however this had little effect on either equity or currency markets. The U.S. Federal Reserve will release its monetary policy statement this evening where borrowing costs are expected to remain unchanged.

Data Releases:

  • AUD: Retail Sales, Q3; Building Approvals, Sep
  • CAD: No data today
  • EUR: EZ PPI, Sep; EZ PMI Services, Oct
  • GBP: PMI Services, Oct
  • JPY: No data today
  • NZD: No data today
  • USD: FOMC Rate Decision, Nov

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