Daily Forex Commentary 9/8/2010

:: Australian Dollar: Friday's release of the RBA Monetary Policy statement swayed little from the recent central bank rhetoric with a relatively neutral document. In local trade the Aussie dollar traded sideways between 0.9135 and 0.9155 for the majority of the day but came to life in offshore exchange peaking above the 92 cent handle before finishing the week marginally below the big figure at 0.9190. Broad based USD selling following a disappointing employment report out of North America was the main catalyst for the move with the week ahead likely to see more downside pressure applied to the Greenback following the bleak outlook for the U.S economy. In Australia today we see the release of ANZ job advertisements and home loan data with the main local attraction this week being Thursday's official employment report.

- We expect a range today in the AUD/USD rate of 0.9150 to 0.9250

:: Great Britain Pound: The Pound Sterling bounced back from an early London sell off to 1.5835 following lower than forecast July Manufacturing and PPI data to trade within a whisker of the psychological 1.6 level against the Greenback. Despite the initial negative reaction to the U.K news USD selling after the announcement of poor non-farm payroll data stateside spurred demand for Pounds. This morning sees the GBP open at 1.5985 and 1.7385 against the U.S and Australian dollars respectively.

- We expect a range today in the GBP/AUD rate of 1.7300 to 1.7480

:: New Zealand Dollar: In what was a very volatile finish to the week the Kiwi rallied from 0.7280 to 0.7345 with the U.S employment report disappointing the market. The non-farm sector shed a larger than forecast 131k jobs in July triggering USD selling across the majors. The first half of the week ahead is very light on the N.Z economic calendar front so moves on the currency are likely to be dictated by developments in the U.S with the FOMC meeting on Tuesday. On the domestic front the major release comes late in the week in the form of Friday's Retail Sales report.

- We expect a range today in the NZD/USD rate of 0.7285 to 0.7385

:: Majors: A drop in German Industrial production fell 0.6% in June, well below forecasts for gains of around 0.5% dragging the Euro lower during early offshore trade on Friday. EUR/USD drifted down from 1.3205 to hit a low of 1.3155 however the markets were focused on the U.S jobs report with the Euro holding firm at 1.3180 ahead of the release. The announcement triggered a wave of USD selling pushing EUR/USD back above 1.33 for the first time since the 3rd of May and USD/JPY down to test the all important 85 level for the first time since November 2009. The Non-Farm payrolls report showed the loss of 131k jobs in July, more than double economist forecasts for a loss of around 65k with the unemployment rate which measures the percentage of those actively seeking work holding steady at 9.5%. With the U.S Federal Reserve bank meeting this week the market will be closely scrutinising the central banks accompanying statement for the announcement of any measures aimed at curbing the economic downturn and spurring growth in the region.

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