Daily Dollar Forecast 10/03/2012
Australian Dollar:
The RBA yesterday surprised around 40% of the market, deciding to cut rates by 0.25%. The accompanying statement while dovish wasn’t extreme and did offer some positives offering no concrete direction for further moves later in the year. The RBA said that growth outlook is ‘a little weaker’ mainly pointing to the potential for mining investment to peak earlier than expected combined with a higher AUD. Coming off the announcement the AUD quickly dropped to the 1.0320 support before breaking that on its way to 1.03. Tuesday night’s offshore data was fairly light and the Aussie traded around the 1.03 level for most of European trade, however late in the US session further doubts over a Spanish bailout saw us break through to 1.0255 and this morning we open at 1.0265. The main piece of local data today will be trade balance due out at 11:30 although markets in general will start to look to the remaining central bank announcements on Thursday.
We expect a range today of 1.0235 - 1.0315
New Zealand Dollar:
Taking positive leads from both Asian Stock Markets and the RBA’s decision to cut the official benchmark rate by 0.25 per cent, the New Zealand rallied hard during local trade. Reaching highs of 0.8336 against its US Counterpart, the overall move higher was relatively short lived however after earlier optimism surrounding a potential Spanish bailout failed to gain any real traction. With investors seemingly torn between higher equities and a distinct lack of direction out of Spain all early gains were quickly eroded as the New Zealand dollar opens this morning unchanged as it currently buys 82.72 US Cents. Meanwhile on the cross-rates the Kiwi opens close to the highest levels seen in more than 12 months against the Aussie at a rate of 0.8052
We expect a range today of 0.8230 – 0.8300
Great British Pound:
UK House prices fell in September by an average of 0.4 per cent from August, statistics released yesterday revealed. Adding to signs that the UK economy is further stagnating, construction output also fell for a second consecutive month in September, the only back to back contraction witnessed in close to three years. With stocks globally receiving mixed leads out of both broader Europe and the US the Sterling drifted between a 24 hour range of (1.6124 – 1.6186) against its US Counterpart. Opening unchanged against the Greenback this morning at 1.6131 the Sterling does however open stronger against both the Aussie (1.5711) and the Kiwi (1.9496).
We expect a range today of 1.5660 – 1.5750
Majors:
Initial optimism turned to pessimism in overnight trade after markets were left disappointed by comments made by Spanish Prime Ministers Mariano Rajoy that a bailout request is not imminent. With Rajoy supposedly keen on further weighing up the terms of a proposed bond buying program announced by the ECB in September it now appears unlikely any move will be made at least until the first of three economic summits begin on October 18. Trading between a range of (1.2879 – 1.2967) against its US Counterpart it has become increasing difficult to determine whether the next move will be higher or lower given investors continue to put a positive spin on news which too be fair points towards a long hard road to recovery not only throughout broader Europe but also the US. On the outlook this week key unemployment readings in the US on Friday are likely to remain the focus ahead of announcements by the ECB, BOE and BOJ this Thursday.
Data releases
AUD:
Trade Balance, HIA New Home Sales
NZD: No Data Today
JPY:
No Data Today
GBP: Services PMI
EUR:
Retail Sales m/m
USD:
ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI