Daily Forex Commentary 27/9/2010

:: Australian Dollar: Last week saw a solid performance from the Australian Dollar, gaining approximately 2.5% in value against the Greenback and closing higher yet again on Friday. Rallying from a session low of 0.9461, the week''s bullish momentum continued throughout Asian and European trade as investors remain confident in the RBAs hawkish outlook and the general state of the Australian economy. The AUD pushed back through 0.9500 where some resistance was met temporarily, but it was not to be deterred as we saw another solid rally to 0.9550 during London hours. It was comments by Fed Chairman Bernanke and the release of the US Core Durable Goods that provided the ultimate catalyst to buoy the currency pair to retest 96 cents for the second time in a week. The Aussie held up well opening this morning hovering around the 96 cent handle with the focus on Asia today likely to be BoJ Governor Shirakawa's talks with business leaders in Osaka and the direction of the USD/JPY.

- We expect a range today in the AUD/USD rate of 0.9550 to 0.9650

:: Great Britain Pound: Fridays markets saw considerable appetite for risk and the Pound certainly benefited from this. A better than expected index for the German Ifo Business Climate supported the currency during the European morning with a steady rally from 1.5640 through 1.5700 to settle comfortably around 1.5720 mid-session. The aforementioned US Core Durable Goods release saw the Pound push higher taking out 1.5800 and closing the week at the highest levels seen since early August, just shy of 1.5830. We open this morning unchanged and with a lack of economic news today the markets will be awaiting Tuesday's Current Account data and Final GDP q/q to see if the current gains can be held onto. Still being outperformed by the Australian dollar we see Sterling open lower this morning at 1.6450, and also against the Kiwi opening at 2.1490..

- We expect a range today in the GBP/AUD rate of 1.6400 to 1.6525

:: New Zealand Dollar: After falling from highs above 0.74 cents last week following disappointing GDP figures, the New Zealand Dollar attempted to recover some of these losses on Friday. Falling back on its label as a risky asset it moved from 0.7271 to test 0.7360 resistance during the European and North American sessions, though the gains remain muted as the market remains concerned about the country's economic growth. Opening marginally higher today the Kiwi has spiked early to touch 0.7370 but fallen quickly back below 0.7360. Also a quiet beginning to the week concerning economic news for the country we are likely to see risk being the main indicator for the currency. Looking across the Tasman it has been choppy trade against the Australian dollar, opening at 0.7658 however the Australian dollar does look comfortable holding onto its recent gains.

- We expect a range today in the NZD/USD rate of 0.7315 to 0.7400

:: Majors: A slightly better than expected German IFO survey on the business climate provided some support for EUR/USD on Friday as it bounced from 1.3300 to finish the week on its highs near 1.3500. Comments from Fed Chairman Bernanke about the fragile state of the U.S economy sent the Greenback lower. Speaking at a conference at Princeton University about the central bank's recent actions he said they avoided "what could have been a global meltdown" by buying mortgage backed securities and treasuries which "additionally stimulate the economy". The dovish nature of the comments have many analysts predicting the Federal Reserve Bank may add additional stimulus sooner rather than later, boosting risk appetite and weakening the USD. Equity markets seemingly ignored a weaker than forecast -1.3% result on headline Durable Goods orders rallying instead on the open with the core result which excludes transportation rebounding from -2.8% to +2% in August. In other news rumours that the BoJ intervened to buy USD/JPY on Friday sent the currency pair up in late Asia on Friday jumping from 84.50 to 85.40 however the move reversed quite quickly after the central bank declined to comment. Broad based U.S dollar weakness during Friday's offshore session saw USD/JPY finish the week around 84.20 near the lows of 84.10.

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