Daily Forex Forecast 04/25/2012
Australian Dollar
All bets are on for an RBA rate cut when the central bank meet next Tuesday after quarterly inflation results came in significantly under expectations yesterday. Consumer prices gained only 0.1% in the first quarter of this year and the annualised figure dropped from 3.1% as of 3 months ago to 1.6%; well outside of the RBA’s 2-3% range. Consequently the Australian Dollar dropped like a stone shedding nearly 50 points initially to find brief support at 1.0270, before continuing lower to test 1.0250. A recovery in sentiment offshore was the Aussie’s saving grace and a flock to riskier assets lifted it from lows back through 1.0300 to trade this morning at 1.0320. A quiet day locally as Australia and New Zealand commemorate ANZAC day so thin trading conditions are expected.
We expect a range today of 1.0270 – 1.0350
New Zealand Dollar
The New Zealand dollar slipped during local hours yesterday as interest rate expectations weigh on the local unit. With poor inflation data arising across the Tasman, those with a vested interest in the Kiwi were also reminded of recent soft economic data that lessens the likelihood of a previously anticipated interest rate hike. Falling against the Greenback the Kiwi touched levels ever so slightly below 0.8100 before a turnaround in risk sentiment following encouraging bond auctions in Europe sent the pair higher again. Opening this morning at 0.8130, markets will be trading thinly as New Zealand, as well as Australia, commemorate ANZAC day. The AUD/NZD trades at 1.2690 (0.7880).
We expect a range today of 0.8090 – 0.8160
Great British Pound
A higher than expected amount of government borrowing failed to keep Sterling down overnight, with a recovery in risk appetite supported Cable at recent highs. Dropping ever so slightly on the revelation the UK’s public sector borrowed nearly 16 billion pounds last month, Cable soon rallied higher and tested key resistance at 1.6150. Failing to break through just yet, GBP/USD trades at 1.6145 ahead of quarterly GDP on the calendar this evening; a public holiday in both Australia and New Zealand will keep the cross rates relatively thin and they open this morning at 1.5630 for the Aussie and 1.9845 for the Kiwi.
We expect a range today of 1.5550 – 1.5720
Majors
Spain, Italy and the Netherlands successfully filled bond auctions last night, with yields in all three destinations falling from previous levels. The euro dollar rallied as these results eased concerns of a spreading debt crisis on the continent, breaking back above 1.3200 on positive risk sentiment. US equities also posted gains overnight and despite a slide in consumer confidence in the world’s largest economy, better than expected new homes sales contributed to the gain in investor confidence. EUR/USD opens this morning a hair short of the 1.3200 handle and USD/JPY has recovered to 81.30 after earlier slipping below 80.90.
Data releases:
AUD: ANZAC Day – bank holiday
NZD: ANZAC Day – bank holiday
JPY: No data due for release
GBP: Prelim GDP q/q; CBI Industrial Order Expectations
EUR: No data due for release
USD: Core Durable Goods Orders m/m; FOMC Statement; Federal Funds Rate