:: Australian Dollar: With little to go on the Australian Dollar put in another quiet performance during Asia yesterday, oscillating primarily between 0.9585 and 0.9610. The end of the day saw some profit-taking once again and we saw a drop to test 0.9560; however support levels held into European trade. It all kicked off from here as the Aussie staged its first rally to have another attempt at 0.9640 resistance where it stalled momentarily and slipped back just below the 96 cents handle. The opening of North American trade and the announcement of less than desirable US Consumer Confidence (which dropped significantly to 48.5 from a previous 53.2) gave the AUD a window of opportunity to stage another attempt at key resistance- and this time successfully. Stalling momentarily at 0.9640, it soon pushed higher conquering further resistance seemingly unperturbed and reached new highs above 0.9680. Consolidating around 0.9675 we finally have some local data to watch today with the Conference Board's Leading Index being released this morning as well as New Home Sales figures.

- We expect a range today in the AUD/USD rate of 0.9620 to 0.9720

:: Great Britain Pound: The Pound traded relatively unchanged during the day yesterday and entered its local session sitting around 1.5800. Some good news arose early on in the day with a much better than expected Current Account balance which increased from -11.3B last quarter to -7.4B, some 2.2B better than anticipated. This announcement coincided with the release of CBI Realised Sales which also came in higher than expected and was welcome news as consumer spending has been a topic for conversation of late. Cable rallied from 1.5790 to gain more than a cent on the back of this information reaching 7 week highs around 1.5890. However the optimism was short-lived as MPC member Adam Posen spoke a little later about the need for further quantative easing , dubbed QE II, in order to support the faltering UK economic recovery. The overall dovish tone of his address was not overlooked by the markets, sending Cable plummeting from fresh highs to only find support at 1.5720. The Pound also lost considerable ground against the Euro falling from 1.1770 to 1.1636 currently, and also against the Aussie and Kiwi, opening at 1.6330 and 2.1365 respectively.

- We expect a range today in the GBP/AUD rate of 1.6250 to 1.6400

:: New Zealand Dollar: The New Zealand Dollar put in a brief attempt at 0.7350 during the morning in Asia however fell back off in the afternoon and entered off-shore trade around 73 cents. Positive European data loaned some support in boosting risk appetite and the Kiwi fought back to 0.7360, where it then consolidated around 0.7350 for the short-term. Also capitalising on poor US data NZD took the opportunity to reclaim some ground against the struggling Greenback, racing towards 0.7400 resistance where the threshold was briefly broken. Drifting just back below, we open this morning trading around 0.7390 with the very recent release of New Zealand's Trade Balance coming in under expectations at -437M. The markets have absorbed this information with minimal impact to the currency pair and opening levels remain unchanged. The AUD/NZD has spent the last 24hrs in range bound trade and opens this morning at 1.3080.

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

:: Majors: The Euro traded higher overnight shrugging off a decline in inflation to receive a boost instead from a better than expected survey of German consumers. Consumer Confidence in Europe's largest economy, as measured by the GfK survey for expectations in October, increased from 4.3 to 4.9 adding support to EUR/USD. It eventually broke through the psychological 1.3500 barrier during North American exchange to post an overnight high of 1.3595. The main catalyst for the move was disappointing U.S Consumer Confidence and Richmond Fed Manufacturing Index data which increases the likelihood of the Fed expanding its spending program. The recent USD weakness also saw USD/JPY retreat back below the 84 level to exchange as low as 83.70 overnight, fast approaching the level of previous currency intervention. Today's Tankan index, a leading indicator of Japanese economic health, will be closely watched as always and could provide some much needed support for USD/JPY and the countries exporters who are doing it tough at the moment.

:: Data Releases:

  • AUD: Jul Conference Board Leading Index & HIA New Home Sales
  • NZD: Aug Trade Balance
  • USD: Fedspeak
  • GBP: Aug Mortgage Approvals & Aug Net Lending to Individuals
  • EUR: Sep Business Climate Indicator, Sep Economic Confidence & Sep Services Confidence
  • JPY: Q3 Manufacturing & Non-Manufacturing Tankan Survey