Australian Dollar: The Aussie was under more pressure than Ricky Ponting yesterday and moved steadily towards an intraday low of 0.9780. In the absence of any major local economic data, the market continued to digest Tuesday’s monetary policy statement with most investors forming the view that rates will remain on hold at least until the end of the first quarter next year. During the offshore session the Aussie moved between a high of 0.9830 down to a low of 0.9750 as the greenback strengthened across the board. Unemployment data is due for release this morning and whilst the market is expecting conditions to have improved, it is unlikely to propel the currency beyond the 0.9850 region on the day. At time of writing, the AUD was trading at 0.9770 against the greenback.

We expect a range today of 0.9740 – 0.9840

New Zealand Dollar: As expected the RBNZ (Reserve Bank of New Zealand) left the official cash rate unchanged at 3% this morning. The currency dropped half-a-US-cent immediately after the announcement after RBNZ Governor Mr. Alan Bollard said that rates were now “projected to rise to a more limited extend over the next two years than signalled in the September statement”. In domestic trade yesterday, the New Zealand dollar followed its Trans Tasman counterpart down during Asian trade, falling from a session high of 0.7576 to 0.7520 as heightened tensions on the Korean peninsula saw a sharp sell-off in commodity based currencies. Adding to the Kiwi’s woes was the release of the Manufacturing Sales quarterly index which showed the manufacturing slowed to 1.3% q/q, down from a previous reading of 3.1%. At time of writing, the kiwi is changing hands at 0.7435 against the greenback.

We expect a range today of 0.7420 – 0.7500

Great British Pound: In the absence of any major local economic data, Pound Sterling (1.5800) held up reasonably well in light of another session of greenback strength across the board. Over the past 24-hours, the pound has moved between a low of 1.5667 and a high of 1.5836. Markets are keenly awaiting tonight’s interest rate decision by the Bank of England and more importantly, whether any new asset purchase measures will be announced. Meanwhile, the pound opens higher against both the Australian Dollar (1.6130) and the New Zealand Dollar (2.1140).

We expect a range today of 1.6100 – 1.6220

Majors: The greenback has strengthened across the board overnight and opens near a 10-week high against the Japanese Yen (83.94) on speculation the extended US tax cuts will be good for the economy. The dollar hit an overnight high of 84.29. Also weighing on the Yen was weaker-than-expected economic data announced earlier in the session. Japanese machinery orders fell 1.4 per cent in October and bank lending slid 2 per cent in November, both adding to signs that the nation’s export-led recovery may be stalling. Meanwhile, losses on the Euro were limited after the Irish government were able to get the first stage of new budgetary measures approved by lawmakers. The 16-nation currency opens today at 1.3260.

Data releases

AUD: Unemployment rate, Nov

NZD: RBNZ Interest rate decision

JPY: Machine tool orders, Nov

GBP: Bank of England interest rate decision

EUR: German CPI, Nov

USD: Initial jobless claims, Dec 4.

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