Daily Forex Commentary 30/8/2010

:: Australian Dollar: The Australian Dollar is stronger across the board today and moved sharply higher against the greenback late in the offshore session on Friday. After spending most of last week being supported around the 0.8850 area, the Aussie opens at 0.8990 on Monday as risk appetite returned after a speech by U.S. Federal Reserve chairman Ben Bernanke who pledged to provide further "accommodation" in order to prevent the world's largest economy from slipping into a double dip recession. The Aussie hit a 24-hour high of 0.8998. Attention will turn to domestic events this week with current account data tomorrow and Wednesdays release of second quarter national accounts which is expected to show a small increase in growth compared to the previous quarter. The Aussie opens higher against the Euro (0.7050), the pound (0.5780) and the Japanese Yen (76.68).

- We expect a range today in the AUD/USD rate of 0.8980 to 0.9040

:: Great Britain Pound: Pound sterling opens little changed against the greenback (1.5523) despite stronger than expected local growth data announced on Friday. U.K. gross domestic product rose 1.2 per cent in the three months to June as construction expanded quicker than previously estimated. Over the last 24 hours the pound traded between a low of 1.5442 and a high of 1.5544. Despite a risk rally in currencies such as the Australian and New Zealand Dollars, Sterlings appreciation was limited as the breakdown of the GDP data revealed that the solid rises in household and government spending is unlikely to be maintained. As a result, the pound opens weaker against both the Aussie (1.7260) and the kiwi (2.1760).

- We expect a range today in the GBP/AUD rate of 1.7210 to 1.7285

:: New Zealand Dollar: The New Zealand Dollar opens higher today against its U.S. counterpart at 0.7122. Higher commodity prices supported the local unit last Friday during the domestic session with support holding around the US70-cent area. The currency came to life during the offshore session hitting a high of 0.7130 as risk appetite returned after a speech by U.S. Federal Reserve chairman Ben Bernanke who pledged to provide further "accommodation" in order to prevent the worlds largest economy from slipping into a double dip recession. Second quarter U.S. economic growth data (1.6 per cent) was not as bad as the market had been expecting. Attention will turn to domestic events this week kicking off with July trade data scheduled for release today.

- We expect a range today in the NZD/USD rate of 0.7080 to 0.7145

:: Majors: The Japanese Yen weakened across the board on Friday night as safe-haven demand was eroded after a speech in the United States by Federal Reserve Chairman Ben Bernanke who pledged to safeguard the economic recovery. The big dollar opens at 85.33 up from 15-year lows as Mr Bernanke commented that he expects a "modest pace" of economic growth and that the FOMC is prepared to provide further "accommodation" if needed. Compared to the pre-data hype, there was only a muted reaction on currency markets to second quarter GDP in the U.S. which came in at 1.6 per cent. Most economists had forecast growth of 1.4 per cent for the period April through June. University of Michigan confidence data came in at 68.9 for August which was lower than the previous month. Meanwhile, the Euro opens little changed at 1.2729.

:: Data Releases: