Daily Forex Commentary 2/8/2010

:: Australian Dollar: Greenback weakness across the board has helped put the Australian Dollar back over US90 cents during offshore trade on Friday and we open in Sydney this morning at 0.9050. The Aussie hit a 24-hour zenith of 0.9066 - just shy of a three-month high - after U.S. second quarter economic growth came in at 2.4 per cent. Soft data and high unemployment in the United States is taking its toll on the greenback, pushing the pound, Aussie, Euro and Yen to multi-month highs. Strong commodities and base metals prices are also supporting the local unit at the moment. Tomorrow, the Reserve Bank of Australia (RBA) meets to discuss monetary policy and rates are expected to remain on hold at 4.50 per cent. As usual, the market will be looking closely at the RBA's accompanying statement and if there is any hint of rates being at an "appropriate setting", the Aussie may come under pressure.

- We expect a range today in the AUD/USD rate of 0.9010 to 0.9080

:: Great Britain Pound: Greenback weakness across the board has helped to push the pound to fresh five-month highs which sees the currency open the new week at 1.5700. In the absence of any local economic data on Friday the pound hit a high of 1.5721 after news across the Atlantic revealed that U.S. economic growth had slowed to 2.4 per cent annual pace. It is likely to be a volatile week for Sterling with the Bank of England set to announce a decision on interest rates this Thursday. Rates are widely tipped to remain on hold at 0.50 per cent. Meanwhile, the pound opens higher against both the Australian Dollar (1.7350) and the New Zealand Dollar (2.1630).

- We expect a range today in the GBP/AUD rate of 1.7320 to 1.7380

:: New Zealand Dollar: The New Zealand Dollar opens higher against its U.S. counterpart on Monday at 0.7260. Despite the Reserve Bank of New Zealand recently hosing down the prospects of a series further moves in interest rates, the kiwi has been well supported after last weeks strong terms of trade result. Stronger commodities and a weak greenback are also underpinning the currency. During Fridays offshore session, the unit hit a 24-hour high of 0.7267 after U.S. economic growth came in weaker than expected pushing the greenback lower across the board. Despite the recent surge however, the kiwi is being outperformed by the Australian Dollar at the moment and opens today 0.8010.

- We expect a range today in the NZD/USD rate of 0.7220 to 0.7295

:: Majors: The big dollar moved beneath 86.00 against the Japanese Yen for the first time this calendar year after U.S. economic growth slowed in the second quarter. The greenback has lost 11 per cent on the Yen this year and hit an overnight low of 85.93 as a string of weak U.S. economic data releases continue to point to a very slow recovery and a sustained period of near-zero per cent interest rates. Gross domestic product came in at 2.4 per cent annual pace which was below most forecasts. Traders are now favouring investments in Japanese yen and Swiss francs. Meanwhile, the Euro opens stronger today at 1.3060 after hitting an overnight high of 1.3093 - just short of a three-month peak. The 16-nation currency has advanced more than 6 per cent over the last month as concerns have eased that the regions sovereign debt crisis would worsen and dampen global economic growth.

:: Data Releases: