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Daily Forex Commentary November 6

06 November 2008 @ 09:14 pm AEST

:: Australian Dollar: After pressing against the 70 cent mark in early trade yesterday the Aussie dollar fell away following a poor reading on Building Approvals for the month of September. Investors ignored a better than expected Trade surplus dismissing it as somewhat of an anomaly and instead focused on the housing data which showed a massive 7.2% drop in September. As a result the AUD fell to an intraday low of 0.6830 before bouncing back in offshore trade. A weaker USD following some woeful U.S economic data gave the Aussie a boost back towards 70 cents as it appeared the currency was again trading on fundamentals. The move was short lived however as the Dow Jones finished down 5% sending the local unit plummeting back to open this morning back on its lows at 0.6835 ahead of what is expected to be a bad employment report today.

- We expect a range today in the AUD/USD rate of 0.6720 to 0.6920

:: Great Britain Pound: The Pound Sterling continued to come under strong selling pressure during early offshore trade falling to a low of 1.5745 after the announcement that U.K PMI Services fell by 4 points to a record low of 42.4 in October. It did stabilise somewhat during European trade exchanging between 1.5780 and 1.5930 until U.S markets awoke to sell the Greenback. After spiking to a high of 1.6200 the GBP/USD opens back at 1.5910 ahead of what is expected to be a very large interest rate cut from the Bank of England this morning with some analysts tipping a reduction of up to 1%. A late sell off in the Aussie dollar sees the cross rate open higher this morning with early exchange on the highs near 2.3300.

- We expect a range today in the GBP/AUD rate of 2.3180 to 2.3480

:: New Zealand Dollar: In yet another volatile offshore session the Kiwi traded in a 150 point range jumping from 0.5950 to an overnight high of 0.6105. With the euphoria surrounding a new U.S president subsiding somewhat equity markets fell and risk aversion reared its head again sending the NZD back down to this morning's open of 0.5975. The Kiwi is expected to remain under some selling pressure in early trade as the announcement of N.Z Q3 employment data is expected to reveal an increase in the unemployment rate.

- We expect a range today in the NZD/USD rate of 0.5925 to 0.6025

:: Majors: As expected Obama was unanimously elected as America's 44th President during yesterday's Asian afternoon causing an immediate spike in demand for the Greenback. However, profit takers stepped in to put a lid on any further gains beyond 99.80 and 1.2790 against the Yen and Euro respectively. In offshore trade the currency markets came to life during NY with the announcement of two woeful pieces of U.S economic data bringing back into focus the harsh reality that is a U.S recession. Economic activity in the services sector failed to grow in October falling well into contraction territory as measured by the ISM non manufacturing index which dropped more than expected to a level of 44.4. Also adding to the negative news was the announcement of more job losses with ADP employment data highlighting a massive 157k decrease in October, well below forecasts of -102k and September's 8k drop. The negative news saw U.S equity markets shed over 5% and the Greenback lose ground against the Euro, exchanging at 1.3110 whilst USD/JPY retreated back to 98.50.

:: Data Releases:

* AUD: Oct Employment Data

* NZD: Q3 Employment Data

* USD: Q3 Unit Labour Costs & Q3 Non-Farm Productivity

* GBP: BoE Rate Decision

* EUR: ECB Rate Decision

* JPY: BoJ Minutes to Oct meeting

* CAD: Sep Building Permits

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