Daily Forex Commentary 24/9/2010

:: Australian Dollar: The Australian Dollar held onto recent gains yesterday and traded quietly throughout the Asian session, hovering between 0.9530 and 0.9574. Soon after entering off-shore trade, a decrease in risk appetite caused the AUD to break the down-side of this range and it fell below 95 cents to test lows near 0.9465. Investor sentiment continued to steer the currency pair overnight as US Unemployment Claims unexpectedly increased 12K to 465K, with a brief rally back above 0.9500 after it was announced US existing home sales increased more than expected to an annualized 4.13M. Opening today lower at 0.9485 the Aussie is likely to maintain a cautious approach as markets look to whether the upcoming US Durable Goods Orders will weigh further on risk appetite.

- We expect a range today in the AUD/USD rate of 0.9450 to 0.9550

:: Great Britain Pound: A quiet day was seen by most currencies yesterday with most volatility occurring during the European and North American sessions. Sterling entered the day in London unchanged at 1.5655 and despite a decrease in Mortgage approvals managed to stage a rally above 1.5730, touching levels not seen since mid-August. Unable to hold onto these gains, Cable fell back below 1.57 as a decrease in market sentiment helped boost the US Dollar and the pair is currently settling around 1.5680. Opening today stronger against the Aussie and the Kiwi, the Pound appears more supported by risk aversion rather than inherent strength.

- We expect a range today in the GBP/AUD rate of 1.6450 to 1.6600

:: New Zealand Dollar: It appeared as though the Kiwi would retest the 74 cent handle in early trade yesterday ahead of the all important N.Z Q2 GDP result with economists forecasting a rise in economic growth from 0.6% in Q1. The market was shocked however to learn that GDP not only fell to 0.2% but that the previous quarters number was revised down to 0.5%. The news sent the NZD/USD lower immediately falling to an intraday low of 0.7305. European markets continued the theme with the Greenback strength and Euro weakness dragging the Kiwi to an eventual low just shy of 0.7250. Despite a subsequent rally and retest of 0.7330 during North American exchange NZD/USD opens this morning at 0.7285 whilst the AUD/NZD cross rate is down from its early European peak of 1.3080 exchanging at 1.3015.

- We expect a range today in the NZD/USD rate of 0.7225 to 0.7325

:: Majors: After hovering around the 1.34 handle against the Greenback in Asia yesterday the Euro fell during early offshore exchange following an unexpectedly low reading on business conditions. The Purchasing Managers Index survey, or PMI as it is known, showed a decline in both the services and manufacturing sectors across the Eurozone sparking some selling in EUR/USD which saw it retest 1.3300 overnight. In the U.S the news was mixed with weekly jobless claims rising above forecasts which continue to reinforce the likelihood of high unemployment for an extended period causing an initial weakening in the USD. The news however was balanced by a larger than forecast rise in existing home sales and an increase in the leading indicators composite index during August. This morning sees the big dollar exchanging at 1.3310 and 84.40 against the Euro and Yen respectively ahead of this evenings release of more U.S economic data in the form of August Durable Goods and New Home Sales.

:: Data Releases: