:: Australian Dollar: The Aussie dollar collapsed in early European exchange following the announcement from the PBOC to lift the reserve ratio required by banks by 0.5%, a move aimed at limiting asset bubbles which will also have the effect of slowing economic growth in China. After failing in its attempt to consolidate above the 89 cent handle the AUD/USD plummeted to a low of 0.8780 following the news before bouncing on the back of a positive U.S Retail Sales report to finish the week at 0.8835. The minutes to the recent RBA meeting where rates were left on hold are scheduled for release tomorrow with the market looking for some clues as to when another move higher could eventuate.

- We expect a range today in the AUD/USD rate of 0.8800 to 0.8900

:: Great Britain Pound: At the start of Friday's European session the Pound reached its intraday high of 1.5740 against the Greenback. The UK economy continued to give mixed signals regarding its recovery with its leading economic indicator slipping to 0.4% from 0.9% in the previous month. The Sterling fell 1% to 1.5580 early in US trade after US retail sales figures were much stronger than anticipated by investors. This was short lived, the Pound bounced back as decline in US consumer sentiment saw the big dollar retreat. The GBP opens today at 1.5665 versus the USD and 1.7720 AUD ahead of today's UK housing statistics with the release of the Rightmove House Price index.

- We expect a range today in the GBP/AUD rate of 1.7620 to 1.7750

:: New Zealand Dollar: Today the Kiwi opens lower at 0.6945 against the US Dollar. After suffering a week of poor economic releases the NZD fell below 0.6900, almost 2% from Friday's Asian high of 0.7025, during offshore trade in the aftermath of the announcement of further measures from China to cool its growth and restrain its inflation. Commodity currencies, including the Kiwi, suffered as concerns that tighter lending in China will dampen the global recovery.

- We expect a range today in the NZD/USD rate of 0.6880 to 0.6980

:: Majors: The Euro declined during Friday's European session following disappointing economic data and tightening reserve requirements for Chinese banks. Economic growth in the Euro-zone, as measured by the GDP data, came in below expectations for a 0.3% rise during the fourth quarter of 2009 increasing only marginally by 0.1% to take the annual decline to 2.1%. Adding to the woes for the single currency was a much larger than forecast 1.7% fall in Industrial production during December pushing EUR/USD down from 1.3685 to a nine month low of 1.3530. In U.S economic data released Consumer Spending during the month of January beat economist forecast for a +0.3% result coming in at +0.5% giving risk appetite a boost and helping EUR/USD back above the 1.36 handle. A disappointing preliminary reading on the February University of Michigan confidence survey put a lid on any further attempts at a rally as EUR/USD finished the week at 1.3625. USD/JPY traded erratically during late Asia and early European trade bouncing between 89.60 and 90.40 on several occasions before settling around the psychological 90 level for the majority of the U.S afternoon. This week kicks off with key Japanese data in the form of preliminary Q4 GDP data with the U.S on holiday for Presidents day likely to see minimal volatility in North American trade.

:: Data Releases:

  • AUD: No Data Expected
  • NZD: Jan Performance Services Index
  • USD: U.S Presidents Day Holiday
  • GBP: Feb Rightmove House Prices
  • EUR: No Data Expected
  • JPY: Q4 GDP