Daily Forex Commentary 9/9/2010

:: Australian Dollar: The Aussie dollar held firm in Asia yesterday despite a negative lead from offshore markets during the previous sessions trading between 0.9100 and 0.9130 for the majority of the day. Reinforcing the strength of the Australian economy was the release of Home Loan data which showed a healthy 1.7% increase in the value of loans during the month of July, above forecasts for a 1.1% rise. During the offshore session overnight the AUD/USD rallied back towards the 92 cent mark with demand coming from a recovery in equity markets and risk sentiment. The local unit opens this morning at 0.9185 ahead of the much anticipated employment report with the official headline rate expected to decline from 5.3% to 5.2%, underpinning the phenomenal performance of the domestic economy. Should the numbers come in above expectations then one would expect the AUD/USD to retest and possibly break through the stubborn 0.9220 resistance level.

- We expect a range today in the AUD/USD rate of 0.9135 to 0.9235

:: Great Britain Pound: The Pound Sterling popped higher in early London exchange yesterday rallying from 1.5380 to an eventual high around 1.5525 against the Greenback. Industrial Production data out of the UK rebounded strongly from the -0.5% June reading posting a solid +0.3% result in July boosting confidence in the economic recovery. This morning sees the GBP exchanging at 1.5475 and 1.6840 against the U.S and Australian dollars respectively with more volatility on the GBP/AUD cross expected in Asia today with the release of local employment figures. This evenings Bank of England meeting will be keenly anticipated with rates expected to remain on hold but the accompanying rhetoric, particularly surrounding the Asset Purchase Target plan, to have an impact on the currency.

- We expect a range today in the GBP/AUD rate of 1.6750 to 1.6900

:: New Zealand Dollar: The Kiwi bounced back from an Asian sell off towards 0.7150 yesterday to enter offshore exchange threatening to break above 72 cents. Resistance eventually gave way with the NZD/USD opening this morning near the overnight highs at 0.7230. Improved risk appetite seemed to be the key behind the move with the release of a slightly better than expected U.S Federal Reserve Beige book report that highlighted a slightly more resilient economy than thought. This morning sees the release of the June quarter economic survey of Manufacturing with all eyes on the key 0.7250 level where sellers appear to be lining up.

- We expect a range today in the NZD/USD rate of 0.7185 to 0.7275

:: Majors: Despite continued negative sentiment surrounding European sovereign debt and a lower than expected reading for German Industrial Production EUR/USD bounced back from its early offshore lows near 1.2650 to open this morning at 1.2720. The release of the U.S Federal Reserve Beige book which documents anecdotal evidence from the 12 district banking regions indicated that two of them pointed to "positive developments or net improvements" with five signalling economic growth at a "moderate pace". Whilst the report did not signal a strong economy it was somewhat of a confidence boost for the markets providing a small boost to equities and risk appetite in general. After making new lows once again in Asia yesterday USD/JPY bounced back from 83.40 to post a high near the 84 level following the report and opens this morning at 83.90. In other news the Bank of Canada raised interest rates for the third consecutive month by 0.25% to 1% overnight sending USD/CAD down from 1.0500 to a low 1.0345 in quick fashion. It does however appear as though rates will remain on hold for the foreseeable future with the accompanying statement saying that "Any further reduction in monetary stimulus would need to be carefully considered in light of the unusual uncertainty surrounding the outlook."

:: Data Releases: