Daily Forex Forecast 05/10/2012
Australian Dollar
The Australian Dollar has dipped closer to parity overnight as coalition talks reach a standstill in Greece. Speculation is rising that the public may need to head back to the polls and, if an anti-austerity government is the result, they may be one step closer to exiting the euro-zone. Never a fan of global uncertainty, the Australian dollar fell from earlier levels closer to 1.0100 to find interim support at 1.0020. Critical to the direction of the Aussie today is the release of local employment figures, where an expected 0.1% increase in the unemployment rate may be the catalyst for the first test of parity since December 2011. Also critical to the local unit is the health of the Chinese trade balance, which officials will release sometime today.
We expect a range today of 0.9990 – 1.0080
New Zealand Dollar
Ongoing political tug-o-war in Greece has forced the New Zealand Dollar to near four month lows as fears escalate Greece may exit the euro escalate. Despite a report from the RBNZ stating the financial system is coping well with international stresses, the local unit drifted lower throughout the day, tangled in the flow of increasing risk aversion. Dipping below 0.7820, the Kiwi recovered initially to 0.7860 however opens lower again this morning at 0.7830. With risk-off still the overriding theme in the markets, downside pressure still remains. Also of note, is the local house price index as published by REINZ as well as trade balance figures from China. Gaining marginally against the Australian Dollar, the NZD/AUD trades today just above 0.7800 ahead of Aussie unemployment data.
We expect a range today of 0.7790 – 0.7870
Great British Pound
Sterling fell 0.5% percent to levels near 1.6075 overnight as the Greenback rallied as a result of safe-haven flows. Ongoing concerns over the stability of the euro-zone did push Sterling higher on the crosses though to 80.15 (1.2476) against the euro, 1.6050 against the Aussie and 2.058 against the Kiwi. Eyes will be on a heavy economic calendar for the United Kingdom this evening, namely the Bank of England’s monthly monetary policy meeting as well as manufacturing production for the month of April. Almost certain to leave interest rates on hold, the question will be whether to add more stimulus to its existing 325 billion pounds ($485 billion) of bond purchases.
We expect a range today of 1.5980 – 1.6100
Majors
The euro has fallen to its lowest level since January 23 as ongoing uncertainty surrounding Greece’s next parliament dampens risk appetite. There are now talks that another election may need to take place early next month and the risk remains the resultant government will anti-austerity and potentially force the exit of Greece from the euro-zone. Also weighed by a slowing in the growth of German exports throughout March, the euro fell to levels below 1.2920 before paring some of its losses on reassurance from officials that Greece would still receive its next tranche of bailout funds. Trading this morning at 1.2930 markets will be watching the ECB bulletin tonight for any insight as to future interest rate movements from the central bank as well as to hear their view on the state of the economic recovery. A flock back to safer assets has also helped the Japanese Yen gain against all of its most traded counterparts, including the Greenback and the USD/JPY starts the day at 79.65. The Japanese current account balance, due for release this morning, is the next key risk event for the pair.
Data releases:
AUD: Employment Change; Unemployment Rate
NZD: REINZ HPI m/m; Business NZ Manufacturing Index
JPY: Current Account; Bank Lending y/y
GBP: Manufacturing Production; Official Bank Rate; Asset Purchase Facility; MPC Rate Statement
EUR: French Industrial Production m/m; ECB Monthly Bulletin; Italian Industrial Production m/m
USD: Trade Balance; Unemployment Claims