Daily Forex Forecast 01/19/2012
Australian Dollar
An increase in local consumer sentiment provided the Australian Dollar with a mild degree of support during local trading hours yesterday. The survey conducted by Westpac showed a 2.4% increase in the index, after last month’s -8.3% reading and the Aussie consolidated slightly above opening levels at 1.0380. While the Australian Dollar managed to rally confidently above 1.0400 in the offshore session as a result of improved sentiment in Europe and the US, more noteworthy at this stage is a staggering 27 year high against the Great British Pound. As the UK’s economy struggles to recover from the Global Financial Crisis and now the effects of the European debt saga, Australia’s economy is forging ahead helped along by continuing growth in China. Touching 0.6796 the night before last, the Aussie rallied again overnight helped by an increase in UK unemployment, briefly edging above 0.6780. Falling back slightly this morning the Aussie Dollar buys 67.55 pence and 104.25 US cents.
We expect a range today of 1.0360 – 1.0460
New Zealand Dollar
The New Zealand Dollar has tracked the Euro higher overnight as the mood on global markets was lifted by an International Monetary Fund’s bid to boost its lending capacity, improved US data, and progress on Greek write-down talks. After spending the local session trading steadily higher through 80 cents to 0.8030, a switch to European hours soon saw a push through to an eventual high near 0.8080. Opening this morning at 0.8070, the local Consumer Price Index is due out shortly where the market expects a steady 0.4% increase for final quarter of 2011.
We expect a range today of 0.8010 – 0.8100
Great British Pound
Unemployment in the United Kingdom rose to a 16 year high in November, a report released last night revealed. Whilst economists were predicting an increase in the unemployment rate to 8.3% it was shown to have increased to 8.4%, although jobless claims only rose by 1,200. Sterling, which is already heavily sold against the Greenback, did not give up any ground on the news and remained above 1.5330. It did however drop to 1.1980 against the Euro and 1.4745 against the Australian Dollar. Improved risk sentiment surrounding the Euro zone has helped Sterling reclaim some ground trading this morning at 1.5440 against the Greenback, 1.4800 against the Aussie and 1.9120 against the Kiwi.
We expect a range today of 1.4730 – 1.4870
Majors
The Euro has rallied in the overnight sessions, first poking its head above 1.2800 verses the Greenback when the International Monetary Fund (IMF) announced it would be willing to expand its lending facility by another $500 billion. In addition to this, a Greek finance ministry official has been quoted to the effect a deal could be reached with private bond-holders, as to the terms and conditions of a bond swap, by the end of the week. The 17-nation currency rallied to a session high of 1.2860 off the back of this speculation and opens this morning just below at 1.2850. Contributing to the Euro’s push higher has been a weaker Greenback as broadly improved risk sentiment squashed demand for safe-haven assets. Although not quite reaching expectations, US Industrial Production still increased by 0.4% last month and confidence among U.S. homebuilders rose this month to the highest level since June 2007. unsure which way to break, the safe haven pair of the US Dollar vs the Japanese Yen has traded in a narrow range between 76.65 – 76.85.
Data releases:
AUD: Unemployment Rate; Employment Change; MI Inflation Expectations
NZD: CPI q/q
JPY: No data due for release
GBP: Nationwide Consumer Confidence
EUR: Current Account; ECB Monthly Bulletin
USD: Building Permits; Core CPI m/m; Unemployment Claims; Philly Fed Manufacturing Index