Australian Dollar: Risk has been removed from the market place in a big way over the past 24 hours as witnessed by a notable fall in the Australian dollar. Dampening demand for the higher yielding asset in local trade the RBA announced that it had increased its sale of the currency last month to a wide range of buyers including other central banks. Whilst passive intervention has been a common theme over this past quarter there remains very real concerns that the Aussie dollar is failing to correct itself not allowing for a natural rebalancing in the economy to occur. Moving to overnight lows of 1.0305 against its US Counterpart ongoing Fiscal concerns in the US, tensions throughout the Middle East as well disappointing European GDP figures all combined to further weaken the higher yielding asset. Meanwhile this morning having dropped close to a full one US Cent the Australian dollar opens weaker at 1.0325.
We expect a range today of 1.0290 – 1.0360
New Zealand Dollar The New Zealand dollar fell in line with Global equities overnight as concerns over global growth once again did the rounds. With European GDP falling by 0.1 percent in the July-September quarter such contractions mark the second recession witnessed since the onset of the GFC in 2009. In addition to weak European numbers corporate earnings throughout the US also missed the mark as did a handful of macroeconomic indicators. Touching lows of 0.8078 against its US Counterpart the New Zealand dollar opens close to these levels this morning as it currently buys 80.85 US Cents.
We expect a range today of 0.8050 – 0.8120
Great British Pound: UK Stocks declined for a second day yesterday after domestic retail sales were weaker than expected. Declining by 0.8 percent in September it now appears unlikely that local consumers will add a great deal to fourth quarter GDP growth prospects. Given ongoing budget deficit talks in the US as well as a lack of growth across broader Europe, it surprises many to see the Sterling which has been relatively well supported against its US Counterpart. Remaining within a 24 range of (1.58422 – 1.5878) the Great British Pound opens this morning in familiar territory swapping hands at a rate of 1.5845. Meanwhile on the cross rates the Sterling opens stronger against the Aussie (1.5345) and the Kiwi (1.9588).
We expect a range today of 1.5310 – 1.5390
Majors: The general direction for markets yesterday was down with the only real winner seemingly the US dollar. Well supported by the distinct shift in risk sentiment global stocks finished weaker following a string of disappointing releases throughout the world’s largest economy. Highlighting the economic costs which are likely to follow Hurricane Sandy weekly unemployment claims surged by 78 000 to 439 000 in the week ended Nov. 10. Adding to the pile of weak reads The Philly Fed Manufacturing Index decreased to minus 10.7 whilst a separate survey also showed slowing conditions in Manufacturing throughout New York. Rallying to highs of 81.45 against the JPY the Greenback is likely to remain closely watched as Law Makers prepare for ongoing budgetary talks. Meanwhile jumping across to Europe and the picture doesn’t get any prettier given Euro-zone GDP which fell by 0.1 percent in the third quarter of this year. In the line with expectation it was once again strength in Germany and France which saved broader GDP from falling further. On the currency front the shared unit opens this morning holding firm, currently swapping hands at a rate of 1.2770 against its US Counterpart.
AUD: No data today
NZD: No data today
JPY: No data today
GBP: No data today
EUR: Current Account, Trade Balance, German Buba President Weidmann Speaks
USD: Capacity Utilization rate, Industrial Production m/m, TIC long-term purchases