Daily Dollar Forecast 09/05/2012
Australian Dollar
The Australian dollar initially rallied yesterday, following the decision by the RBA to leave domestic interest rates on hold at 3.5%. A relatively upbeat statement confirmed current monetary policy is appropriate and the Aussie pushed from pre-announcement levels of 1.0235 to an intraday high of 1.0285. A re-evaluation of future direction still left most believing the next move would be a cut and amongst nerves on the global stage ahead of the ECB meeting tomorrow evening, the Aussie gave away gains and fell lower to key support at 1.0220. With weak US manufacturing data being added to the mix overnight, this may provide some support to the Aussie dollar moving forward as QE3 talks could quite possibly intensify as the next FOMC meeting draws closer. However he local unit currently sits on the edge of further declines should it break through the support channel of 1.0200/20 with second quarter GDP figures a key focus over the next 24 hours.
We expect a range today of 1.0180 – 1.0280
New Zealand Dollar
The New Zealand dollar struggled to find its legs yesterday, despite a survey by ANZ confirming its index of commodity prices rose for the first time since February. Comprised of the average price of the nation’s main commodity exports, the 0.5% increase failed to outweigh global concern as US manufacturing slowed and investors began to show nerves ahead of a key European central bank meeting tomorrow evening. Falling from an intraday high of 0.7995, the Kiwi touched support near 0.7920 against the Greenback and also continued lower against the Euro to reach levels of 1.5860 (0.6305). The local economic calendar is quiet for the rest of the week, although a few more key releases across the Tasman may keep the Kiwi moving through association with its Aussie counterpart. The antipodean cross rate currently trades at 1.2870 (0.7770).
We expect a range today of 0.7900 – 0.7990
Great British Pound
Sterling approached a four week low against the euro on Tuesday and fell from recent highs above 159 US cents as local retail sales figures disappointed investors and the country’s construction sector contracted. The first negative reading for the BRC Retail Sales monitor since May showed a 0.4% drop for the month of August and construction PMI figures composed by Markit revealed a drop to 49.0 from a previous 50.9. EUR/GBP pushed higher to levels above 0.7940 but has since pared some gains and trades back at 0.7915 this morning; Cable slipped slightly from its levels this time yesterday and after touching very briefly above 1.5900 due to Greenback volatility, the pair change hands just off 1.5870 this morning. Trade against the antipodeans is still pushing ever so cautiously higher with the Pound at 1.5520 against the Aussie; a little more life in the Kiwi saw the rate briefly crack 2.0000 but we open back at 1.9970 this morning.
We expect a range today of 1.5460 – 1.5600
Majors
Nerves and anticipation ahead of the European Central Bank’s meeting tomorrow evening has left the Euro consolidating some of its recent gains, as investors contemplate whether or not the bank will announce sufficient enough measures to keep the region’s debt troubles at bay. After trading above 1.26 for much of the Asian session yesterday and into European hours, the single currency began to feel a little dizzy and has since consolidated back around 1.2560/70. ISM manufacturing figures caused concern for the US economy last night, an unexpected fall to 49.6 began speculation that the sector may no longer be strong enough to lead the country’s economic recovery and pull up employment figures without the aid of stimulus. Although investor appetite has been dampened all around, the Greenback has also been curbed as such figures support potential QE3 talk at the next Fed meeting on the 12/13 September. This morning the Greenback has moved marginally off lows against the Japanese Yen at 78.40 with only minor data due for release this evening.
Data releases:
AUD: GDP q/q; AIG Services Index
NZD: No data due for release
JPY: No data due for release
GBP: No data due for release
EUR: Retail Sales m/m ; Final Services PMI; German 10-y Bond Auction
USD: Revised Nonfarm Productivity q/q; Revised Unit Labor Costs q/q