Daily Forex Forecast 08/22/2011
Australian Dollar: The Australian Dollar appeared to have tired during the Asian session on Friday, consolidating in range-bound trade between 1.0320 and 1.0380. Heading off-shore the pattern continued for most of Europe, however a sudden rally in risk early in New York pushed the Aussie to an eventual high of 1.0480.
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Struggling of late with the uncertainty shrouding overseas economies and the threat of a potential rate cut here on local shores, the Aussie was unable to sustain these gains and trailed lower to finish the week flirting with the 1.0400 handle.
With demand for the Greenback receiving a slight boost on the open of Asian trade, our dollar opens lower and at the time of writing sits at 1.0380. Locally and internationally the economic docket is bare so in light of this focus will be back on government officials and policy makers in Japan, Europe and the US.
We expect a range today of 1.0310 - 1.0420
New Zealand Dollar: In an environment where investors are shunning risk, the New Zealand Dollar is facing considerable downward pressure and it spent the majority of Friday's local session trading around the 0.8200 area. A brief rally in riskier assets lifted the Kiwi from 0.8220 to an intraday high of 0.8280 however it was only downhill from there as it consolidated below 82 cents by the close of trade.
Opening on Monday morning against a move towards the Greenback, the New Zealand Dollar is at 0.8180 and with no expected data releases for the next 24 hours we expect the nation's currency to move in line with the continual swings in risk sentiment. Against the Australian Dollar the Kiwi opens marginally higher at 0.7880, a result of the Aussie being slightly more vulnerable to a risk adverse environment.
We expect a range today of 0.8120 - 0.8210
Great British Pound: The Great British Pound broke through 1.6600, albeit briefly, on Friday for the first time in three and a half months as risky assets made a quick gain against the Greenback. Clearly appearing uncomfortable at such heights it quickly tumbled, losing nearly 150 points and closing the week back at 1.6470.
In what is a looking to be a quiet session in the economic calendar is anything to go by, Cable opens at the same level today with its direction likely to come from swings in risk sentiment in the short-term. Holding up against its antipodean counterparts, the GBP/AUD is trading at 1.5890 and the GBPNZD is holding above 2 at 2.0170
We expect a range today of 1.5800 - 1.5950
Majors: The Yen has opened lower this week after it was reported in a Japanese paper that government officials are ready to intervene in the foreign exchange market if the nation's currency continues to rise.
After spiking briefly below 76 Yen to the Dollar and forging a new post-war high on Friday, the safe-haven pair has gapped back to 76.75 at the open of markets this Monday morning. This has also weighed on the Swiss Franc, which opened above 79.00, as investors remain cautious towards potential moves by central banks to influence the markets. The Euro was given a boost during Friday's session from levels below 1.4300 to a high of 1.4440 as German PPI came in at 0.7%, well above the expected 0.2%.
Also helping it gain the ground was a statement made by the ECB's Juergen Stark, where he commented in an interview it was risky to the Euro-Zone to keep interest rates too low for too long. Investors didn't need to look too deeply for interest rate clues when he pointedly said it wasn't the ECB's responsibility to keep interest rates low in order to fund country's deficits.
The shared currency settled to close trade just below 1.4400 and opens this morning at 1.4375, ahead of tonight's German ZEW survey of economic sentiment, always an indicator that hold's considerable market influence.