Australian Dollar: Friday's Asian session was a fairly quiet one for the AUD with most willing to trade the ranges following a busy Thursday day and night. In fact the AUD stayed within a 30 point range for the full Asian session and through most of the European one, it was only once the US came in that any significant movement was seen. The AUD then took a fall from 1.0360 down to 1.0320 on the back of worse than expected US housing data and poor earnings reports, although it is also likely the drop came from those who finally accepted that a Spanish bailout wasnt being announced at the EU summit. We start the week at 1.0315 with very minimal data today, although there will be some interest on a speech by RBA Assistant Governor Debelle this morning. The real focus locally this week will be the inflation data on Wednesday with the outcome likely to influence the November rate decision.
We expect a range today of 1.0280 – 1.0360
New Zealand Dollar: As expected Friday was a fairly quiet Asian session for currencies and with today being an NZ public holiday it may well be the same story. The markets again kept much of their focus on the EU summit on Friday and with northing of any substance coming out of the summit the currencies stayed relatively range bound. It was during the US session that we saw the most movement on the Kiwi; it had one final go at breaking above 0.82 before following equities down to an eventual low of 0.8149. The drop in equities came on the back of some poor earnings results released in the US, this time from GE and McDonalds. This morning we open at 0.8155 and with the local market enjoying a break today overseas equity markets are likely to be the main driver of the NZD today while the focus for this week will be the RBNZ rate decision on Thursday.
We expect a range today of 0.8120 – 0.8200
Great British Pound: The pound sell off from that started on Thursday night took a pause on Friday day only to resume during the US session on Friday night. Poor US housing data and a drop in share markets both in Europe and in the US kicked risk aversion off sending the cable below 1.6000 which is its lowest level since October 11. The Sterlings weakness has been helped along by speculation that the BOE will bring on more quantitative easing next month. UK data is fairly light today so most movements will likely follow risk flows which at the moment are looking quite negative, later in the week we have UK GDP data which will again get the markets talking about whether further stimulation is required. On the crosses the GBP continues to underperform against the two major Pacific currencies, currently buying 1.5525 AUD and 1.9625 NZD.
We expect a range today of 1.5490 – 1.5560
Majors: Friday night saw the second day of the EU summit with again little more than comments coming out. The biggest surprise was what wasnt spoken about, a Spanish bailout, with most of the attendees deciding to instead focus on Greece. All were well scripted making fair and balanced comments on the economic situations, stating that support would be given to those in need but with conditions attached. Most were hoping for Spain to request a bailout at the summit but that never occurred, the most significant announcement was in regards to the banking union that will come into effect next year. On Friday night we had US existing home sales released, which declined 1.7%, which was a greater decline that forecast, that combined with a 1.5% fall in the Dow pushed risk aversion up and the USD with it; EUR/USD fell to a low of 1.3012 and USD/JPY reached a high of 78.88. There is minimal data out today worldwide except for Bank of Japan minutes but later in the week things start to heat up with the Feds rate decision on Wednesday, and US GDP on Friday.
AUD: RBA Assistant Governor Debelle Speaks
NZD: No data today
JPY: Merchandise Trade Balance, BOJ minutes
GBP: No data today
EUR: Government Debt-GDP Ratio
USD: No data today