Australian Dollar: Local investors were slightly disappointed by yesterdays Westpac Consumer sentiment index release sending the Aussie dollar down from early morning levels around 83 cents. Throughout the Asian trading day the AUD drifted lower and entered offshore looking vulnerable to further downside at 0.8240. Poor Euro-zone Industrial Production data dragged the Euro and Aussie down again in early London to test 0.8180 however all eyes were on the impending FOMC meeting. Following the announcement to keep rates on hold the market AUD rallied back above 83 cents to exchange above 0.8350 before pulling back slightly to open this morning at 0.8325.

- We expect a range today in the AUD/USD rate of 0.8280 to 0.8380

Great Britain Pound: After dipping to momentarily exchange below 1.6400 in early London trade the Pound Sterling bounced back to settle around 1.6470. The revival began following better than expected July jobless claims data with resistance to any move higher coming from a relatively dovish Quarterly Inflation report from the Bank of England. The Central bank predicts inflation is likely to slow to below 1% and remain below their 2% target for the next 2 to 3 years. The GBP received a further boost however in U.S trade following the FOMC meeting as optimism surrounding the global economy appeared to supersede concerns about the UK, pushing to a high of 1.6560 before levelling out around 1.6500 in early morning trade. The cross rate failed to hold on to gains above 2 and opens back at 1.9780 with downside pressure expected to persist in the near term.

- We expect a range today in the GBP/AUD rate of 1.9650 to 1.9880

New Zealand Dollar: The NZD/USD managed to bounce back from an early London selling frenzy to open this morning considerably higher. After testing 66 cents the Kiwi settled back at 0.6640 heading into the U.S trading day and the key FOMC announcement. Whilst interest rates were kept on hold, the accompanying statement painted a picture of an economy having passed the eye of the storm which gave the market some confidence. The Fed announced what appears to be an October end to the quantitative easing program and equity markets rallied with the Dow Jones finishing up 1.3% taking the NZD higher. The Kiwi opens this morning at 0.6710 and 1.2420 against the U.S and Australian dollars.

- We expect a range today in the NZD/USD rate of 0.6650 to 0.6750

Majors: The Euro took a dive in early offshore trade dropping to 1.4085 against the Greenback, its lowest level since late July. News of a drop in Euro-Zone Industrial production was the catalyst for the move with the 0.6% decline in June and a 17% fall for the year to date shocking analysts. Investors however were eyeing key U.S data scheduled for release with the less than expected widening in the Trade Deficit providing some confidence heading into the FOMC announcement. As predicted the Federal Reserve kept interest rates on hold at record low levels but it was comments about the state of the economy and the decision to extend the timeframe of the quantitative easing program that moved the markets. In the accompanying statement Fed Chairman Bernanke said data suggests that economic activity is levelling out a positive indication of their assessment on the U.S economy. The statement also indicated that the FOMC will continue its current program with a view to a gradually halt the spending spree by the end of October. Equity markets in the region rallied on the news and so too did the USD/JPY and EUR/USD jumping t overnight highs of 96.70 and 1.4245 respectively with the EUR/JPY cross rate adding 2.3% from its lows near 134.

Data Releases:

  • AUD: Q2 Housing Affordability, Aug Consumer Inflation Expectations & Average Weekly Wages
  • NZD: Jul Food Prices
  • USD: Jul Advanced Retail Sales, Jun Business Inventories & Jul Import Price Index
  • GBP: No Data Expected today
  • EUR: Q2 GDP
  • JPY: Jul Department Store Sales
  • CAD: No Data Expected today

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