Daily Forex Forecast 03/05/2012
Australian Dollar
Given the apparent lack of direction across markets on Friday the Australian Dollar struggled to keep its head above water during the domestic session. After starting the day above the 1.08 handle the Australian Currency drifted lower with all of the “good” news seemingly drying up out of Europe. As the local unit entered the offshore session, data flows were headlined by disappointing German Retail Sales as well as a spike in Spanish 10-year bond yields. Opening this morning at a rate of 1.0729 against its US Counterpart the Australian Dollar has been tested above the 1.08 level several times over the past week and failed to find any real support at each attempt. In what is shaping up as a very busy week locally the Reserve Bank of Australia are set to meet tomorrow where the official benchmark interest rate is expected to remain unchanged at 4.25 percent.
We expect a range today of 1.0680 – 1.0780
New Zealand Dollar
In the absence of any local data releases the New Zealand Dollar drifted lower for much of Friday’s session with investors selling the Kiwi to reach an eventual low of 0.8285 against its US Counterpart. As the initial shine of Greece’s second bailout package continues to fade, riskier assets such as the New Zealand Dollar struggled late last week with the Greenback being the major benefactor of global risk-flows towards the safe-haven unit. With global equities also finishing in the red the New Zealand Dollar opens more than a full cent weaker against the US Currency as it currently buys 82.87 US Cents.
We expect a range today of 0.8240 – 0.8350
Great British Pound
Despite manufacturing figures surprising on the upside earlier in the week and Construction PMI data beating expectation on Friday the Great British Pound has lost ground for much of the past 24 hours trading between a 24 hour range of (1.5822-1.5965) against its US Counterpart. Failing to find any real support up above the 1.59 handle, the Sterling opens a full cent weaker, currently trading at a rate of 1.5828 against its US Counterpart. Highlighting data flows out of the UK this coming week the Bank of England are expected to meet on Thursday where its widely tipped they will maintain their current bond-purchasing target at 325 billion pounds. Meanwhile on the cross-rates this morning the Sterling opens relatively unchanged against both the Australian Dollar (1.4741) and the New Zealand Dollar (1.9075)
We expect a range today of 1.4700 -1.4810
Majors
US Stocks fell, pulling the S&P 500 Index down from the highest level seen since 2008 whilst Oil declined in what was an overall bearish session across global markets on Friday. In a clear sign that investors have to a large degree moved their attention to the harsh reality that faces Europe in the form of strict austerity measures the 17 Nation EURO lost ground against 10 of its 16 major counterparties. Having started the day at a rate of 1.3309 against its US Counterpart the shared unit lost over a cent following the announcement by Spanish Prime Minister Mariano Rajoy that the Euro-Zones fourth largest economy would target on overall budget deficit of 5.8 percent of Domestic GDP up sharply from its previous target of 4.4 precent. With Spanish 10-year notes subsequently rising for the first time in 3 days, the woes of the EURO were further compounded when statistics also revealed that Retail Sales in Germany also declined by 1.6 percent in December against an expected drop of 0.5 percent. In further currency happenings The Bank of Japan further reinforced there pledge to maintain inflation at 1% resulting in a fresh bout of Yen weakness as the USD/JPY spiked to a 24 hour high of 81.388 against its US Counterpart
Data releases
AUD:
MI Inflation Gauge m/m, ANZ Job advertisements, Company operating profits q/q
NZD: Visitor Arrivals m/m
JPY:
No Data today
GBP: Services PMI
EUR:
Retail Sales m/m
USD:
ISM Non-Manufacturing PMI, Factory Orders m/m