The Australian dollar has weakened over much of the past 24 hours after minutes from the Reserve Banks most recent meeting showed officials remained concerned and cautious about both domestic conditions amid slowing grow in China and Europe. Whilst the RBA also stated the continued strength of the Australian dollar remained a risk to the economy the higher-yielding asset was dragged overall lower yesterday touching 1.0409 against its US Counterpart. Having declined 2 cents in the early parts of this week, from a six-month high, there has been a general consensus that Australian dollar strength cannot be sustained purely through the artificial help of the US Federal Reserve’s most recent bout of stimulus. Meanwhile this morning the Aussie dollar opens weaker currently swapping hands at a rate of 1.0454 against its US Counterpart.
China, and the Euro-zone's GDP growth forecasts have been reduced to 8.2% (prior +8.5%) and -0.1% (prior 0.2%) respectively; whereas Germany, France and the US results were amended upwards.
We expect a range today of 1.0420 – 1.0480
New Zealand Dollar
The New Zealand swung between losses and gains for the majority of yesterday and despite the subsequent rally from QE3 appearing to be somewhat overdone the riskier backed asset has done well in general to consolidate its gains. After opening the day at a rate of 0.8291 against its US Counterpart lows were briefly touched around the 0.8250 level with global equities and commodities prices also heading south. In the pipeline today figures are expected to show New Zealand’s current-account deficit widened to $1.64 billion in the second quarter with a break above the 83 US Cents mark not expected for the Kiwi. Meanwhile this morning the New Zealand dollar currently buys 82.69 US Cents.
We expect a range today of 0.8230 – 0.8300
Great British Pound:
The Great British Pound seemed unable to make it mind up yesterday, trading within a restricted half cent range against its US Counterpart. Whilst the Sterling opens this morning only marginally weaker at 1.6242 against the Greenback there has been some renewed debt concerns which have surfaced out of Europe over the past 24 hours after Spain sold 4.6 billion Euro’s of bills in their first auction since the ECB announcement last week. In local data releases UK Inflation slowed in August as Consumer Prices rose 2.5 percent. Matching the majority of expectations the Bank of England has forecasted inflation will continue to ease back towards their 2 percent target by the year’s end. Continuing the flat 24 hours which has been witnessed the Sterling opens higher against the Aussie (1.5536) however weaker against the Kiwi (1.9632)
We expect a range today of 1.5500 – 1.5580
After reaching its highest level since 2007 the S&P 500 slid 0.1 percent overnight with the expectation that global equities are likely to remain relatively flat leading up to US Elections. Following a week in which the limelight has been so heavily focused on the actions of Central Banks it’s likely the attention of investors will shift away from liquidity solutions to the actual underlying fundamental issues at hand. Taking a step back from its recent advance the Euro has fallen against its US Counterpart overnight after Spanish 10-year bonds rose for the first time in four days. Dropping as low as 1.3028 before recovering this morning to open at 1.3046, there is little doubt borrowing costs throughout Spain are likely to rise in the short-term as the expectation remains that they will not be forthcoming in asking for a bailout anytime soon. Whilst in Europe the ZEW economic indicator of economic sentiment for Germany increased by 7.3 percent in September, the first rise in five months. Meanwhile this morning the Greenback opens stronger against the Japanese Yen at 78.795.
MI Leading Index m/m, RBA Gov Kent Speaks
NZD: Current Account
Monetary Policy Statement, BOJ Cash Rate
GBP: MPC Meeting Minutes
No Data Today
Building Permits, Housing Starts, Existing Home Sales
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