Australian Dollar: The Australian Dollar paused to take a breath yesterday following on from what has been a historical week for the Nations Currency.

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With stronger than expected inflationary data spurring the Aussie earlier in the week the Currency has done very well to sustain its recent rally maintaining support levels above the 1.10 US Cents Level, as investors continue to diversify their wealth holdings away from US and European Assets the comparatively high domestic interest rates in Australia has attracted the attention of offshore investors.

In the absence of any local data yesterday the Australian Dollar traded between a domestic high of 1.1074 before a slight sell off in offshore trade seeing it reach a low of 1.0978. This morning the Australian Dollar opens slightly lower at a rate of 1.1004 against its US Counterpart.

We expect a range today 1.0940 – 1.1040

New Zealand Dollar: The New Zealand Dollar got off to a slow start yesterday trading to a mid morning low of 0.8673 before rebounding well against its US Counterpart.

As expected yesterday the New Zealand Central Bank left its official cash rate unchanged at a rate of 2.50 percent, however investors interest in the Nations currency gained momentum as Governor Allan Bollard announced he saw little need for the previous cut in March to remain in place much longer.

With economists now expecting the RBNZ to raise rates at the Banks next meeting, the Currency again rallied reaching an overnight high of 0.8752 as it opens this morning currently buying 87.05 US Cents.

We expect a range today 0.8670 – 0.8750

Great British Pound: The Great British Pound opens half a cent higher against its US Counterpart this morning following on from a choppy day of trading. While the Sterling remained range bound throughout the Asian session, investors snapped up the Nations currency pushing it to an overnight high of 1.6372 against the Greenback.

As UK Stocks advanced yesterday off the back of better than expected earnings a retail-sales index released yesterday fell to its lower level in 13 months for July, further highlighted an economy still struggling to gain any real momentum.

Meanwhile this morning the Great British Pound opens stronger also against the Australian Dollar at a rate of 1.4873

We expect a range today 1.4820- 1.4925

Majors:

US Stocks dropped last night as the S&P 500 Index finished lower for a fourth Straight Day. Reversing all of its gains from a day earlier the recent medium-term strategy of selling US Dollars continued last night as there remains no positive news out of the US Debt Crisis from Washington. Despite US unemployment claims and Pending Home Sales both surprising the markets and coming in above expectation the Greenback opens lower against the Japanese Yen this morning at rate of 77.702. In other news, following on from what has been a much quieter week for European Markets the EURO traded between a low of 1.4252 and a high of 1.4399 against its US Counterpart as it opens around 30 basis points lower this morning at a rate of 1.4331. Volatility and above average ranges are expected this evening as the market looks ahead to a broad range of economic releases as well as any update on the progress of US Debt discussions.

Data releases

AUD: Private Sector Credit m/m

NZD: Building Consents m/m

JPY: Manufacturing PMI, Household Spending y/y, National Core CPI y/y, Unemployment Rate, Prelim Industrial Production

GBP: Nationwide HPI, Net Lending to Individuals, M4 Money Supply m/m, Mortgage Approvals

EUR: German Retail Sales, CPI Flash Estimate y/y, Italian Prelim CPI m/m

USD: Advance GDP q/q, Employment Cost Index q/q, Chicago PMI, Revised UoM Consumer Sentiment.

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