Daily Forex Forecast 06/12/2012
Australian Dollar
Following a week of extended gains the Australian dollar retreated yesterday as local markets remained closed for the long weekend. With fresh hope and renewed optimism surfacing out of Europe that a Spanish bank bailout in the form of 100 billion Euro’s would signal, at the very least a step in the right direction, the intial relief rally for the Australian dollar was a relativley short-lived one as ground above the parity-level remained too hard to occupy. Falling to an overnight low of 0.9860 against its US Counterpart, fears that Europe’s most recent attempt at a solution remains a mere band-aid have been further amplified by whispers out of Italy that they are likely to become the fifth nation to put there hand out for international aid. Opening this morning, currently buying 98.61 US Cents, downside support is likely to kick in around 0.9820
We expect a range today of 0.9800- 0.9910
New Zealand Dollar
The New Zealand Dollar fell more than half a US Cent against its US Counterpart yesterday as optimism over Spain’s 100 billion Euro bank recapitilisation waned. Given the markets intial reaction, it was hoped such moves would bring with it, renewed faith in the ability of European Political’s to act promptly however early optimism has now been replaced by fears of further contagion as Greece moves closer to returning to the Polls later this week. Trading to an overnight low of 0.7687 against the Greenback, short-term direction is again likely to be dictacted by underlying risk flows out of Europe ahead of the cash-rate decision expected from the Reserve Bank of New Zealand on Thursday. Meanwhile this morning the Kiww opens weaker currently buying 76.89 US Cents.
We expect a range today of 0.7650 -0.7740
Great British Pound
British Stocks retreated yesterday as did the Great Bristish Pound in what proved to be a relatively flat day for the Sterling. Falling to an overnight low of 1.5472 against its US Counterpart the Sterling struggled to attract the eye of investors as skeptism continued to mount over Spains most recent bank-bailout package. Peace of mind has turned to worry over the course of past 24-hours with the intial risk rally failing to maintain its mometum. Despite the small losses for Britain’s currency against the Greenback the news was much better when comparing against the Aussie (1.5693) and the Kiwi (2.0125) which both open a full cent stronger this morning. Looking ahead this week with Industrial and Manufacturing Production figures due for release this evening, a move back towards 1.5550 remains a distinct possiblity should such results surprise on the upside.
We expect a range today of 1.5640 - 1.5750
Majors:
Global stocks slumped as in did commodities in overnight trade as optimism over Spains Bailoiut plan gave way to fears that the 100 Billion Euro’s promised to the regions bank will once again fall-short of what is required. Whilst such moves do reduce the chance of a full-blown bailout for Spain, the underlying costs of ensuring Spanish debt have struggled to head south, despite its handout. With sovereign debt concerns likely to linger across markets for some time key risks in the short-term are likely to come in the form of Greek Elections (June 15) as well as continued rumours out of Italy that they are likely to become the fifth Euro Nation to seek assitance as they struggle with debt levels in excess of 2 Trillion Euros, more as a share of its economy than any other developed nation other than Greece and Japan. Surprising many investors with its stubborn signs of resislance, the 17-nation Euro has managed to lose some solid ground over the past 24 hours as it opens this morning around 150 basis points lower against its US Counterpart at a rate of 1.2481.
Data releases
AUD:
No data today
NZD: Westpac consumer confidence
JPY:
Core Machinery Orders m/m
GBP: NIESR GDP Estimate, Nationwide Consumer Confidence
EUR:
French CPI m/m, Germain Final CPI m/m, Industrial Production m/m, German 10-y Bond Auction
USD:
Core Retail Sales m/m, PPI m/m, Retail Sales m/m, Core PPI m/m, 10-yr Bond Auction