Daily Forex Commentary 27/8/2010

:: Australian Dollar: The Conference Board Leading Economic Index for Australia rose 0.1% in June 2010 however private capital expenditure unexpectedly fell -4% from the previous quarter causing the Aussie to dip momentarily to 0.8830 US Dollars midday in Asia. Other than this minor stumble the Aussie Dollar remained range bound between 0.8850-0.8900 versus the US Dollar. Improved risk sentiment saw the Aussie rally briefly to 0.8915 against the US Dollar before being pushed back to 0.8852. This morning the Aussie opens at 0.8860.

- We expect a range today in the AUD/USD rate of 0.8825 to 0.8900

:: Great Britain Pound: The Cable rally failed to reach 1.5600 against the US Dollar despite improved German consumer confidence after upbeat risk flows from equities fizzled. UK retailers reported sales volumes rose by 35pts from 33pts in July exceeding expectations of a 23pt gain. The greater than expected sales figures could not prevent the Sterling from sliding down to 1.5502 following better than expected jobless data from the US. The Pound rebounded; again making an attempt at 1.5600 US Dollars amid speculation policy makers in the US will announce further easing measures. The Pound opens today at 1.5524 US Dollars, 1.7528 Aussie and 2.2083 Kiwi.

- We expect a range today in the GBP/AUD rate of 1.7480 to 1.7535

:: New Zealand Dollar: The New Zealand Dollar rose against all 16 of its most-traded counterparts, gaining for the first time in three days versus the greenback, following speculation Japanese policy makers will intervene to halt the Yen's advance. The Kiwi reached for 0.7100 US Dollars offshore after it was revealed US jobless claims had fallen by 31,000 from previous week. However fears of a double dip recession in the US remain ahead of Fed Chairman Bernanke's speech this evening in which investor's widely expect to point towards further stimulus measures. The kiwi opens today at 0.7030 US Dollars.

- We expect a range today in the NZD/USD rate of 0.7000 to 0.7055

:: Majors: German GFK consumer confidence rose to its highest level in more than 2 years hitting 4.1 up from 4.0 previously. The Euro rallied to 1.2745 against the US Dollar upon release of the news. The M3 money supply printed at 0.2% versus 0.4% indicating that credit remains weak, repelling the Euro from the 1.2750 area. Better than expected US weekly jobless claims sent the Euro tumbling to 1.2265 versus the Greenback before consolidating around 1.2700. Meanwhile the Yen weakened on speculation the departure to the U.S. of central bank chairman Masaaki Shirakawa will delay any plan to announce additional stimulus measures. This comes as more political uncertainty presents itself in Japan ahead of a leadership challenge Prime Minister Naoto Kan faces next month. Offshore the Greenback weakened against the Yen amid speculation the US Federal Reserve will announce a more active measure to boost the faltering US economy.

:: Data Releases: