Despite a report from the Reserve Bank of Australia which showed 23 National Central Banks around the globe hold the Australian Currency as a reserve, hence sustaining the value of the Aussie Dollar, the higher-yielding unit opens this morning overall weaker against its US Counterpart. Following a week in which the Australian dollar rallied to a six-month high in excess of the 1.06 mark there has been some profit taking over the past 24 hours which saw the Local Unit fall to lows of 1.0454. Keeping in mind a weaker Greenback has done the Australian Dollar a lot of favours over the course of the past month in order for the upward trend to remain in-tact, at some point stronger fundamentals will need to eventuate as the longer-term influences of stimulus start to wear off. Meanwhile this morning all eyes will be on the RBA’s minutes from their most recent September meeting as the Aussie opens half a cent weaker at 1.0476.
European stocks recorded three consecutive day of gains driven by optimism central banks from both sides of the Atlantic will opt for new stimulus initiatives to underpin growth.
We expect a range today of 1.0420 - 1.0510
New Zealand Dollar
The New Zealand dollar fell yesterday as equity markets on both sides of the Atlantic declined. With the majority of risk associated assets being sold off as a result there was a general consensus that the initial reaction to QE3 may have been overdone. Heading south for the majority of the past 24 hours the New Zealand dollar appeared weighed down at levels close to the 83 US Cents mark touching lows of 0.8249 against its US Counterpart. In the absence of any local data due for release today commodity prices and the performance of Asian stocks will dictate price action as interim support looms at 0.8220. Meanwhile this morning the Kiwi opens a third of one US Cent weaker currently swapping hands at a rate of 0.8260
We expect a range today of 0.8220 – 0.8300
Great British Pound:
Despite a sell-off in global equities, concerns of a slow in China as well as ongoing squabbles throughout Europe the Great British Pound has been one of the best performing major currencies over the early parts of this week finding some solid support above the 1.6200 mark against its US Counterpart. Reaching overnight highs of 1.6272, CPI figures which are due for release in the early hours of this evening will be closely monitored both from an interest rate and exchange rate perspective. Meanwhile on the cross this morning the Sterling also advanced by more than a full cent against both the Aussie (1.5508) and the Kiwi (1.9663).
We expect a range today of 1.5470 – 1.5550
Whilst investors remained overall satisfied with the measures taken from both the ECB and The US Federal Reserve last week, the shine has come off the subsequent rally over the past 24 hours as it appears the initial buying frenzy may have overshot the mark. Failing to provide any support US Manufacturing figures also did little to improve sentiment dragging with it both the USD and JPY which remain under firm selling pressure. Whilst profit takers will take credit for much of the sell-off in overnight trade it’s likely the market will start to pay much great attention to the underlying fundamentals given its recent obsession with the actions of Central Banks. After reaching its highest level since December 2007 the S&P 500 was also dragged lower overnight as European Union finance ministers failed to agree on a timetable for a more unified banking sector as well as squabbling over the role of the ECB following Germany’s approval of the ESM’s intention to buy the bonds of sovereign nations. Meanwhile this morning the value of the Euro has been maintained as it currently trading at a rate of 1.3114 against its US Counterpart.
RBA Gov Debelle Speaks, Monetary Policy Minutes
NZD: No Data Today
No Data Today
GBP: BOE Inflation Letter
German ZEW Economic Statement
Current Account, TIC Long-Term Purchases
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