Daily Forex Forecast 05/20/2011
Australian Dollar: A strong rally in Australian equities was enough to support the currency from the outset on Thursday pushing it towards 1.0680 where it spent most of the Asian session. The market is prepared to buy the Aussie on any dips at the moment even as recent weaker-than-expected economic data suggests the pressure has eased on the Reserve Bank to raise rates when they next meet in June.
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During the offshore session, the Aussie moved to a low of US106 cents where the buying interest emerged once again, mainly due to softer-than-expected data releases in the United States. The Aussie opens at 1.0660 on Friday.
We expect a range today of 1.0635 - 1.0720
New Zealand Dollar: The currency received a boost during Thursday's local session on the release of the national budget. Whilst there were no major surprises, Finance Minister Mr Bill English unveiled plans to raise NZ$5-7bio via some partial privatisations along with a path to surplus by 2014/15.
Gross domestic product is tipped at 4 per cent next year and an operating deficit of NZ$16.7bio. The kiwi shot up to an intraday high of 0.7930 and headed into the European session around these levels. In overnight trade the unit moved to a low of 0.7860 ahead of this morning's opening level around the US79 cent mark.
We expect a range today of 0.7850 - 0.7960
Great British Pound: A higher-than-expected rise in retail sales announced on Thursday has prompted a rally in Sterling overnight. Against the greenback, the pound hit an overnight high of 1.6242 after UK retail sales rose 1.1 per cent in April, exceeding the 0.8 per cent predicted by many in the market.
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The currency rallied steadily throughout the New York session with buyers coming out of the woodwork around the 1.6150 level as the greenback was sold across the board amid weaker-than-expected economic data announcements out of the United States. Meanwhile, the pound opens little-changed against both the Australian Dollar (1.5210) and the New Zealand Dollar (2.0520).
We expect a range today of 1.5150 - 1.5230
Majors: The greenback opens largely weaker against a basket of currencies after a series of weaker-than-expected economic data releases overnight. Existing home sales unexpectedly declined 0.8 per cent in April whilst the Conference Board's index of leading indicators (a gauge of the economic outlook for the next three to six months) also fell in April.
The Euro moved higher overnight and opens at 1.4311. Meanwhile, the big dollar hit a high on Thursday of 82.22 against the Japanese Yen after the release of growth data yesterday revealed Japan's economy has fallen back into recession. Gross domestic product contracted to an annualised 3.7 per cent in the three months through March in the first reading since the March 11 earthquake.
Data Releases
AUD: No data today
NZD: Credit card spending, April
JPY: Bank of Japan interest rate decision, May
GBP: No data today
EUR: German producer produces, April
USD: No data today
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