Daily Forex Commentary 13/10/2010

:: Australian Dollar: The Australian Dollar opens higher against the greenback today at 0.9860, recovering from a low of 0.9785 during yesterday's domestic session after a fall in business confidence. Whilst business conditions improved slightly in September according to the NABs monthly survey, confidence slid one index point to 10 points. Also taking the wind out of the Aussies sails yesterday was a weaker local stock market weighed down by mixed offshore leads. During last night's offshore session, the unit moved steadily higher as the greenback weakened across the board after the minutes of the US Federal Reserve's September 21 meeting revealed the central bank was poised to ease monetary policy "before long".

- We expect a range today in the AUD/USD rate of 0.9825 to 0.9920

:: Great Britain Pound: Pound Sterling (1.5788) opens weaker against the greenback after a series of economic reports released today added to speculation the Bank of England may need to pump more money into the economy to avert another recession. The Royal Institute of Chartered Surveyors measure of house prices slid to a 16-month low whilst retail sales by value in September rose an annual 0.5 per cent compared to 1 per cent a month earlier. Meanwhile, CPI remained at 3.1 per cent annualised pace - marginally above the central bank's ceiling. The pound is sharply lower against both the Australian Dollar (1.6015) and the New Zealand Dollar (2.0920).

- We expect a range today in the GBP/AUD rate of 1.6000 to 1.6060

:: New Zealand Dollar: The New Zealand Dollar opens higher against the big dollar at 0.7545. Upside moves were limited throughout Tuesdays domestic session after RBNZ Governor Mr Alan Bollard described the economic recovery as "brittle, uncertain and full of surprises" in the central banks annual report published yesterday. The currency hit an intraday low of 0.7480 before recovering somewhat and entering the European session around the US75 cent mark. The kiwi moved steadily higher throughout the New York session as the greenback weakened across the board after the minutes of the US Federal Reserve's September 21 meeting revealed the central bank was poised to ease monetary policy "before long".

- We expect a range today in the NZD/USD rate of 0.7510 to 0.7585

:: Majors: The greenback correction was short-lived after the minutes of the US Federal Reserve's September 21 meeting revealed the central bank was poised to ease monetary policy "before long" and are prepared to "provide additional accommodation if needed". The U.S. Dollar opens near fresh 15-year lows against the Japanese Yen at 81.79 and is softer against the Euro at 1.3913. The 16-nation euro moved off an overnight low of 1.3774 after European Central Bank council member Axel Weber noted during a speech in New York that it is now time for officials to show how they will withdraw emergency lending measures.

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