Forex Daily Commentary

Aussie and Kiwi Dollars / British Pound, March 08

2010-03-08T03:16:00.000-08:00

Aussie and Kiwi Dollars: The Aussie benefitted from stronger than expected jobs figures from the US on Friday. Unemployment and Payroll data improved, causing investors to shift into riskier assets, in this case, the Aussie and the Kiwi. AUD/USD opens up at 0.9120 this morning, after reaching a high of levels above 0.9130. Economists are already talking of a possible short term correction, as investors take profit on long positions and sell the Australian dollar. GBP/AUD opens slightly lower at 1.6630, but given the growing divergence in interest rates we could easily test last week’s lows of below 1.6500. In New Zealand better than expected manufacturing and home build figures pushed the Kiwi above 0.7000 against the dollar and below 2.1700 against the pound. Seasonally adjusted residential building rose 7.4% in the December quarter, and manufacturing sales rose 3.1% in the same period. Although recent economic data has been better than many expected, it is unlikely that the RBNZ will raise rates at its Wednesday policy meeting. Rates are likely to remain at 2.5%.

- I expect a range today in the GBP/AUD rate of 1.6500 to 1.6700

- I expect a range today in the GBP/NZD rate of 2.1500 to 2.1700

GBP/EUR, March 08, 2010

2010-03-08T03:14:00.001-08:00

Euro: Good news for Greece this weekend, French premier Nicholas Sarkozy has stated he would work to support the Greeks and assist should the need arise. In a statement to EU leaders, Sarkozy added that “whilst Greece doesn’t need assistance right now, we have the measures, we are ready, we are determined”. Clearly positive news for the Eurozone and the ailing southern states who have until now, looked for a route out of this downturn without turning to fellow EU members. Greece’s Papandreou has also become more vocal about his contempt for speculators, talking this weekend about the market in CDS (Credit Default Swaps, a form of insurance for bonds). In conjunction with Bernanke in the US, the EU is looking to introduce measures that may curb excessive, and thus detrimental, trading in these obscure derivatives. All of this news is positive for the Euro, and we open at 1.3690 and 0.9020 against the dollar and the pound respectively. It is likely that further positive news from Greece and the EU regarding fiscal support will support the Euro in the short to medium term. In other news, Germany’s finance minister Wolfgang Schaeuble has indicated that his government is already thinking of possible alternatives to helping a failing state, and talk of setting up an IMF style European monetary fund will buoy the 16 member single currency.

- We expect a range today in the GBP/EUR rate of 1.1050 to 1.1160

GBP/USD, March 08, 2010

2010-03-08T03:13:00.000-08:00

United States Dollar: The dollar weakened slightly this morning after a string of positive news flows from Europe (see below). The story wasn’t as positive in the UK however, with continued talk of the possibility of a hung parliament in the upcoming elections. The Confederation of British Industry (CBI) has stated that the Government and Alistair Darling must use the final budget before the election to make efforts to slash the deficit and improve Britain’s long term finances. Many note however, that this is unlikely, as Labour would not want to “rock the boat” and lose votes before May. This is likely to subdue any kind of rally for the pound. Last week was a volatile one for sterling, trading as low as 1.4785 on Monday 1st March, up to levels above 1.5160 on Friday. Despite the persistent talk of election worries, the pound crawls higher, and we open at 1.5180.

- I expect a range today in the GBP/USD rate of 1.5100 to 1.5275

GBP/AUD, March 08, 2010

2010-03-08T03:08:00.000-08:00

Great Britain Pound: Pound Sterling (1.5125) opens higher on Monday after a report in the US on Friday night showed fewer jobs were lost than expected spurring demand for riskier assets and higher-yielding currencies. The pound was little-changed during the local session after UK producer prices rose in February as higher commodity prices sustained inflation, which is currently running above the governments 3 per cent ceiling. The pound has slumped this year on budget deficit concerns. Meanwhile, the pound opens lower against both the Australian Dollar (1.6660) and the New Zealand Dollar (2.1690).

- I expect a range today in the GBP/AUD rate of 1.6600 to 1.6750

Majors, March 08, 2010

2010-03-08T00:37:00.002-08:00

Majors: The greenback and Japanese Yen were both weaker across the board after the US non-farm payrolls report was released on Friday night. The dollar hit a 10-day high against the Yen at 90.20 soon after the data which revealed a loss of 36,000 positions in February after a revised 26,000 decrease in January. The report was better than expected, leaving the jobless rate at 9.7 per cent, spurring demand for riskier assets and higher-yielding currencies. Meanwhile, the Euro (1.3625) firmed as EU member nations continue working on a contingency rescue plan for Greece. In overnight trade, the Euro moved from a low of 1.3529 to close near its session highs around 1.3623.

AUD/USD, March 08, 2010

2010-03-08T00:37:00.000-08:00

Australian Dollar: The Australian Dollar has managed to hang onto its recent gains and opens the new week at 0.9060. During Fridays local session, the unit consolidated around the US90 cent mark and traded in a narrow band ahead of U.S. employment data. The eagerly-awaited jobs report came in better than expected with the unemployment rate holding at 9.7 per cent as payrolls dropped by 36,000. The data prompted a spike in the Aussie to a session-high 0.9090 on optimism the global economic recovery may be gathering pace. Meanwhile, the Aussie is sharply higher against the Japanese Yen and opens at 82.00 compared to Friday’s opening level of 80.24.

- I expect a range today in the AUD/USD rate of 0.9040 to 0.9100

GBP/NZD, March 08, 2010

2010-03-08T00:35:00.001-08:00

NZD/USD, March 08, 2010

2010-03-08T00:20:00.001-08:00

New Zealand Dollar: The New Zealand Dollar opens higher on Monday at 0.6945 after a report in the US on Friday night showed fewer jobs were lost than expected spurring demand for riskier assets and higher-yielding currencies. The U.S. unemployment rate remained unchanged at 9.7 per cent, softening the greenback and pushing the kiwi to an overnight high of 0.6971. Meanwhile, the kiwi remains near nine-and-a-half year lows against the Australian Dollar at 0.7650 as the Reserve Bank of New Zealand is expected to leave interest rates on hold this week at 2.5 per cent compared to Australia's official cash rate of 4.00 per cent.

- I expect a range today in the NZD/USD rate of 0.6920 to 0.6980

GBP/AUD, March 03, 2010

2010-03-02T15:29:00.001-08:00

Great Britain Pound: The Pound Sterling found some respite overnight with a weaker Greenback helping arrest the recent slide in the Cable. Investors shrugged off a mildly disappointing purchasing manager’s report for the U.K construction industry, instead pinning their hopes on an impending announcement of a new deficit reduction package out of Greece in the next 24 hours. Support at 1.4850 held in early London exchange with the subsequent bounce taking GBP/USD back towards 1.5 as it opens this morning at 1.4965 whilst the GBP/AUD cross rate continues to struggle exchanging around 1.6550 in early Asia.

- I expect a range today in the GBP/AUD rate of 1.6475 to 1.6625

Majors, March 03, 2010

2010-03-02T15:26:00.000-08:00

Majors: The Euro made a new low overnight exchange at 1.3435 against the Greenback with inflation in the Euro-zone dropping from an annual rate of 1% in January to 0.9% in February. Support held however better than expected producer prices gave the Euro a boost along with the likelihood of the announcement of further budget cuts by Greece possible as early as tomorrow. The big dollar weakened across the board following the return to risk with EUR/USD finishing at 1.3600 and USD/JPY at 88.65 with the latter trading at its lowest level in 2010. With no meaningful U.S economic data released overnight it was a relatively subdued North American session as investors eye Friday’s employment report for an update on the state of the economy.

AUD/USD, March 03, 2010

2010-03-02T15:25:00.000-08:00

Australian Dollar: The strength of the Australian economy was evident once again yesterday following the release of a much stronger than forecast 1.2% rise in Retail Sales during January adding some support to the AUD/USD in early Asian trade. The news was tempered somewhat however with an unexpected 7% decline in Building Approvals for the same month keeping the Aussie dollar capped around the 90 cent mark heading into the RBA rate announcement. Australia’s central bank raised the official cash rate by 0.25% to 4% after keeping rates on hold the previous month sparking an immediate spike above 90. The move proved short lived however as the news was factored in by many traders with long positions being squared after the release. Offshore markets resumed the rally taking the AUD/USD back up to 0.9050 as the U.S dollar lost ground across the board with confidence returning amidst the expectation of new deficit reduction measures from Greece. Today sees the release of Q4 GDP data out of Australia with economic growth expected to have increased from 0.2% to around 0.7%.

- I expect a range today in the AUD/USD rate of 0.8985 to 0.9085

GBP/NZD, March 03, 2010

2010-03-02T15:24:00.000-08:00

Great Britain Pound: The Pound Sterling found some respite overnight with a weaker Greenback helping arrest the recent slide in the Cable. Investors shrugged off a mildly disappointing purchasing manager’s report for the U.K construction industry, instead pinning their hopes on an impending announcement of a new deficit reduction package out of Greece in the next 24 hours. Support at 1.4850 held in early London exchange with the subsequent bounce taking GBP/USD back towards 1.5 as it opens this morning at 1.4965 whilst the GBP/NZD cross rate opens relatively unchanged at 2.1485.

- I expect a range today in the GBP/NZD rate of 2.1380 to 2.1550

NZD/USD, March 03, 2010

2010-03-02T15:23:00.000-08:00

New Zealand Dollar: The announcement of an interest rate rise in Australia added some initial support to the Kiwi around 0.6980 U.S dollars however buying interest waned during late Asian afternoon exchange and the NZD/USD entered offshore at 0.6960. After dipping to a low of 0.6925 in Europe the Kiwi staged a rally back to 0.6980 following a return to risk and gains in EUR/USD. The AUD/NZD cross rate continues to garner plenty of interest trading within a whisker of 1.3 to open this morning near the highs at 1.2975 as the AUD/USD continues to edge higher whilst the NZD/USD remains relatively range bound around 70 cents.

- I expect a range today in the NZD/USD rate of 0.6925 to 0.7000

Great Britain Pound, Australian Dollar and Kiwi, March 03, 2010

2010-03-02T15:19:00.000-08:00

Aussie and Kiwi Dollars: The RBA raised rates overnight to 4% in an attempt to cool inflation. Australia’s largest banks passed on the rate rise immediately, lifting the rate at which consumers deposit and borrow. Immediately after the news AUD/USD traded up to levels above 0.9030 before calming and trading around the all important 0.9000 level. The rate rise highlights the growing disparity between Australia and most other major economies in the world, which are at present, still stuck in a world of debt and stimulus packages. Nowhere is this clearer than in the GBP/AUD rate, which yesterday fell to 1.6545 from an open at levels above 1.6900. Despite this rate rise the New Zealand dollar sold off slightly overnight, possibly on local investors switching funds to Australian assets. In the medium to long term, the news in Australia is likely to provide support to the Kiwi as demand for high yielding currencies increases.

- I expect a range today in the GBP/AUD rate of 1.6450 to 1.6700

- I expect a range today in the GBP/NZD rate of 2.1300 to 2.1500

GBP/EUR, March 03, 2010

2010-03-02T15:18:00.000-08:00

Euro: Greece finally got the break it was looking for yesterday, with the press firmly focused on troubles in the UK. Trickles of news from Germany shed little light on the future possibility of any bailout package from the EU. German and Greek bonds sold off yesterday on the back of continued ambiguity from EU bigwigs. Appetite for Eurozone debt (even the EU’s safest government Germany) has fallen considerably since the start of the crisis, fuelling concern of a domino effect. Whilst these concerns are becoming more prominent as time goes on, disappointment risks grow. EUR/USD fell from 1.3650 levels down to 1.3460 as investors shifted assets to “safer” currencies such as the dollar and the Yen. Against the pound the Euro rose to levels above 0.9150, with sterling taking the award for being the ugliest currency of the day. We open at levels above 0.9070 this morning.

- I expect a range today in the GBP/EUR rate of 1.0930 to 1.1080

GBP/USD, March 03, 2010

2010-03-02T15:17:00.000-08:00

United States Dollar: Once again the dollar advanced against most of the majors on the back of risk selling. In the US, softer than expected data did not dampen demand for the world’s reserve currency, driving the dollar index (a trade weighted basket of currencies) towards 9 month highs above 80.5. In the UK investors fretted about the implications of a hung parliament and GBP/USD saw its biggest one day drop in more than a year. After reaching a high of 1.5204 in early trading yesterday, the pound plummeted to a low of 1.4784 as long positions were squeezed out (triggering further stop loss selling) and speculators jumping on the selling bandwagon. There is talk that the pound could fall further still, and despite positive news from the manufacturing sector, downside risks will weigh heavily on the pound over the next few days, and possibly up until the general election in May. In the press this morning, the predictable comparisons between Greece and the UK are being made with renewed fervor, stirring up what may indeed become a sterling sell-off spiral.

- I expect a range today in the GBP/USD rate of 1.4800 to 1.5000

Majors

2010-02-23T14:06:00.001-08:00

Majors: The Euro opens lower today at 1.3520 after declines in business and consumer confidence in Europe and the United States raised concerns about global growth. Global equities and commodities were also lower, dampening demand for currencies linked to economic growth. Business confidence in Germany declined for the first time in 11 months whilst the U.S. consumer sentiment index fell to 46 – the weakest level in 10 months and much lower than economists forecasts. The data backs up the recent comments from Federal Reserve Bank of San Francisco President Janet Yellen who said yesterday that the U.S. economy still needs “the support of extraordinarily low rates”. Meanwhile, the Japanese Yen (90.10) also rallied across the board.

NZD/USD

2010-02-23T14:05:00.003-08:00

NZD/USD: The New Zealand Dollar opens sharply lower on Wednesday at 0.6910 after weaker than expected U.S. consumer confidence data released overnight took the wind out of the sails of higher yielding currencies and riskier assets. The kiwi was unable to hang onto the recent gains above US70 cents and declined gradually during the New York session to a low of 0.6890 as signs the global recovery may slow weakened demand for commodity-linked currencies. Meanwhile, the kiwi is down from 2-year highs against the Euro and opens at 0.5100.

- I expect a range today in the NZD/USD rate of 0.6875 to 0.6945

GBP/AUD

2010-02-23T14:05:00.001-08:00

GBP/AUD: The pound opens lower today at 1.5430 after Bank of England Governor Mervyn King said officials would do “whatever seems appropriate” to prevent a relapse in the UK economy. Sterling fell from an intraday high of 1.5574 down to a low of 1.5394 as the governor’s comments signalled to the market that the central bank may expand its 200 billion-pound bond buying program. Meanwhile, the pound has outperformed its antipodean rivals overnight and opens higher against the Australian Dollar (1.7320) and the New Zealand Dollar (2.2290).

- I expect a range today in the GBP/AUD rate of 1.7280 to 1.7375

Aud/Usd

2010-02-23T14:04:00.000-08:00

Aud/Usd: The Australian Dollar opens sharply lower on Wednesday just under US89 cents after weaker than expected U.S. consumer confidence data released overnight took the wind out of the sails of higher yielding currencies and riskier assets. The Aussie had a quiet local session on Tuesday but came to life during a pre-dinner speech by Reserve Bank official Ric Battellino who said, amongst other things, that “the exchange rate will probably continue to rise”, briefly pushing the unit to a one-month high above 0.9050. The rally was short-lived however as risk-aversion took over during the New York session which saw a gradual 2-cent decline down to a low of 0.8877.

- I expect a range today in the AUD/USD rate of 0.8870 to 0.8945

Great Britain Pound and NZD

2010-02-23T00:20:00.000-08:00

Great Britain Pound: The Pound opens steady against its U.S. counterpart on Tuesday at 1.5485. In the absence of any economic data releases in the United Kingdom overnight, Sterling traded between a low of 1.5429 and a high of 1.5520. Near-term, the pound is likely to remain under pressure due to the market’s concerns over the U.K.’s fiscal deficit. Meanwhile, the pound is steady against both the Australian Dollar (1.7190) and the New Zealand Dollar (2.2060).

- I expect a range today in the GBP/NZD rate of 2.2000 to 2.2145

Majors

2010-02-22T15:04:00.002-08:00

Majors: The Japanese Yen moved higher overnight against the big dollar (91.14) on market concerns as to the pace of the Federal Reserve’s stimulus withdrawal. Speaking in San Diego yesterday, Fed Bank of San Francisco President Janet Yellen said the U.S. economy will operate below potential this year and that “for the time being, the economy still needs the support of extraordinarily low rates”. Meanwhile, the greenback also rose against the Euro (1.3600) as the market awaits clarity on the Greece situation after the European Union denied there were any plans at this stage for a bailout

New Zealand Dollar and USD

2010-02-22T15:04:00.000-08:00

New Zealand Dollar: In the absence of any local economic data on Monday, the New Zealand Dollar traded in a subdued fashion compared to recent sessions hovering around the US70 cent mark. Support for the local unit came in the form of market speculation that members of the Eurozone were working on a proposal to support Greece get through their sovereign debt concerns. The kiwi opens today at 0.7010 after moving between a low of 0.6990 and a high of 0.7036 during offshore trade.

- I expect a range today in the NZD/USD rate of 0.6960 to 0.7035

Great Britain Pound and AUD

2010-02-22T15:03:00.001-08:00

Australian Dollar and USD

2010-02-22T15:02:00.001-08:00

Australian Dollar: The Australian Dollar opens steady today a shade under the US90 cent level. The local unit was buoyed during the domestic session on Monday on speculation members of the Eurozone were working on a proposal to support Greece. A strong day for the region’s equity markets also provided support to the currency which briefly hit an intraday high of 0.9014. During overnight trade, the unit gradually moved from a low of 0.8972 back towards resistance at 0.9000 despite an EU spokesperson stating there were no such plans to bail out Greece.

- I expect a range today in the AUD/USD rate of 0.8970 to 0.9040