Daily Forex Commentary 15/9/2010

:: Australian Dollar: Speculation the U.S. Federal Reserve will purchase up US$1 trillion in government bonds to aid the economic recovery has weakened the greenback across the board pushing the Australian Dollar to a two-year high near 0.9450 during brisk overnight trade. Profit-takers have since emerged and the local unit opens beneath US94 cents this morning at 0.9390. During yesterday's domestic session the unit drifted back towards US93 cents even as data showed that business sentiment surged in August as global markets calmed. The NAB''s business confidence index rose to a four-month high of 11 from 2 in July. Although down a shade, the Aussie remains strong against the Euro (0.7220) and the British Pound (0.6040)

- We expect a range today in the AUD/USD rate of 0.9350 to 0.9425

:: Great Britain Pound: Pound Sterling (1.5539) opens higher today after U.K. consumer prices rose 3.1 per cent in August. Inflation has exceeded the British government's 3 per cent limit for a second consecutive month on the back of higher food prices. Sterling hit an overnight high of 1.5586 as the greenback weakened across the board amid speculation the U.S. Federal Reserve will purchase up US$1 trillion in government bonds to aid the economic recovery. Meanwhile, the pound is marginally higher against both the Australian Dollar (1.6540) and the New Zealand Dollar (2.1160).

- We expect a range today in the GBP/AUD rate of 1.6500 to 1.6550

:: New Zealand Dollar: The New Zealand Dollar opens little-changed today against the greenback at 0.7335 as local economic data released yesterday weighed on the currency. Retail sales in July dipped 0.4 per cent compared to a 1 per cent rise the previous month. The kiwi fell sharply on the news from 0.7340 straight down to 0.7285. However, the unit rallied in offshore trade up to 0.7390 as the greenback weakened across the board amid speculation the U.S. Federal Reserve will purchase up US$1 trillion in government bonds to aid the economic recovery. The kiwi opens weaker against the Australian Dollar at 0.7790.

- We expect a range today in the NZD/USD rate of 0.7300 to 0.7360

:: Majors: The Greenback is weaker across the board on speculation the U.S. Federal Reserve will increase its quantitative easing program later in the year and buy additional Treasury securities (i.e. print more money) to aid the economic recovery. The U.S. Dollar tumbled to fresh 15-year lows against the Japanese Yen at 82.93 during the offshore session after Japanese Prime Minister Naoto Kan retained the leadership. USD/JPY opens this morning at 83.00. Meanwhile, the Euro rallied above 1.3000 for the first time in over a month as traders shunned the greenback. The 16-nation currency was lower earlier in the session as German investor confidence fell to minus 4.3 in September from +14 in August, the lowest reading since February 2009.

:: Data Releases: