Daily Forex Forecast 02/04/2013

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Australian Dollar: Following a week in which the Australian dollar lost substantial ground against its US Counterpart the sell off continued intraday on Friday after a Chinese manufacturing gauge unexpectedly fell in the month of December. Whilst the manufacturing index rose to 50.4 the weaker than expected figure does highlight the negative influence of below par demand from offshore. Reaching a low of 1.0360 the Australian dollar rebounded late in the session after US markets provided a boost in the form of improved labour market and manufacturing reads. In what is shaping up as a monumental week for the higher yielding asset several key local data releases are expected to keep investors fingers on the pulse highlighted by a RBA rate decision tomorrow. This morning sees the Australian dollar open broadly weaker at 1.0400 against the Greenback

We expect a range today of 1.0370 – 1.0430

New Zealand Dollar Triggering a rally in global risk appetite the New Zealand dollar received a boost overnight Friday after data showed signs of improvement in the world’s largest labour market. Rebounding nicely from earlier lows of 0.8373 US Payrolls rose by 157 000 last month. Whilst global equities also recorded their fifth straight week of positive gains all signs pointed higher for the kiwi as it ran out of steam just above the 0.8450 mark. Opening this morning half a cent stronger at 0.8446 there appears some strong resistance on approaches towards 85 US Cents

We expect a range today of 0.8410 – 0.8480

Great British Pound: In figures released on Friday Britain’s manufacturing sector expanded modestly in January as output grew at its fastest pace since September 2011. Although the manufacturing PMI figure of 50.8 was viewed as an overall positive The Great British Pound has struggled to keep pace with a significantly stronger Euro. Dragged even lower by an economic outlook which is far from promising the Sterling is likely to remain weak at least in the medium term. Shedding a staggering cent and a half against the Greenback the Sterling opens this morning lower, in a big way, at 1.5694. Meanwhile on the cross rates this morning, the picture looks equally grim with the Pound lower against both the Aussie (1.5080) and Kiwi (1.8570)

We expect a range today of 1.5040 – 1.5120

Majors: US Stocks rose to a five year high on Friday in what was an overall positive session across financial markets. Whilst US Jobs data for January came in line with expectation, there were some upward revisions of previous releases which showed the largest economy produced 247 000 new jobs in November and 196 000 in December. Stoking optimism that labour market conditions in the world’s largest economy are improving, belief was further re-enforced after ISM Manufacturing PMI comfortably beat expectation. Whilst the US dollar has strengthened the Japanese Yen continued its recent slide as witnessed by the rise in the USD/JPY which opens stronger this morning at 92.91. Speaking of rises the EURO has continued its advance, rallying to its strongest level against the US dollar in 14 months. In line with the rally optimism surrounding the 17 nation group gained further traction over the weekend following reports the ECB’s balance sheet has fallen to 2.93 trillion Euro’s given it hasn’t purchased any sovereign debt for 45 straight weeks. Meanwhile this morning the Shared unit opens significantly stronger at 1.3637.

Data releases

AUD: MI Inflation Gauge m/m, Building Approvals m/m, ANZ Job Advertisements

NZD: No Data Today

JPY: No Data Today

GBP: Halifax HPI m/m

EUR: Sentix Investor Confidence

USD: Factory Orders m/m

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