Daily Forex Forecast 11/23/2011
Australian Dollar: As European woes continue to shroud the markets and US Budget cut concerns resurface the Australian Dollar had little support into the start of Asian hours yesterday. With nothing scheduled on the local economic calendar the Aussie spent the morning trading off support around 0.9825/30 before a re-affirmation of US Debt ratings by both S&P and Moody's gave risk sentiment a slight boost. Trading to a session high around 0.9880, these levels proved unsustainable and the pair quickly dropped back to 0.9830. A mixed bag of headlines and economic data out of Europe and the US during offshore trade has kept the Australian Dollar volatile, although range bound, in a very uncertain environment. This morning we open around 0.9850 with the main focus during Asian hours being that of Chinese PMI due for release later today. Support currently holds at 0.9800 although downside risks still remain.
We expect a range today of 0.9780 - 0.9900
New Zealand Dollar: It was a quiet session in Asia yesterday as the recent erosion of risk appetite stabilised and most higher-yielding assets found short-term support. For the New Zealand Dollar this level was established around 0.7460 and despite several attempts by the Greenback, support held into the move to European trade It wasn't long before a development from the IMF sent the Kiwi higher, touching 0.7510 on increased risk appetite although concerns for the growth of the US economy later dampened any new bravado being displayed by investors. This morning the NZD/USD is relatively unchanged from yesterday's levels at 0.7475 and with little happening locally over the past 24hours the AUD/NZD cross rate is also unchanged at 1.3160 (0.7599).
We expect a range 0.7420 - 0.7510
Great British Pound: An impressive reduction in the U.K.'s budget deficit overnight has shown worth to the severe spending cuts implemented by Chancellor of the Exchequer George Osborne, with net borrowing falling to 3.4 billion from 10.2 billion pounds in the month of October. This did not prevent the Pound reaching six-week lows against the Greenback however, as ongoing risk aversion and speculation of further quantitative easing by the BOE continue. This evening markets will be watching closely the release of the minutes from this month's central bank monetary policy meeting to see if further stimulus is indeed on the cards. Opening this morning off lows at 1.5630 against the US Dollar, Sterling also remains supported against the high-yielding Aussie and Kiwi Dollars at 1.5890 and 2.0910 respectively.
We expect a range today of 1.5830 - 1.5950
Majors: Europe has shuffled its deck of cards once more overnight to create a mild recovery in risk sentiment. With headlines still driving the market a new one from the International Monetary Fund gave investors hope that officials are doing their best to tackle the debt crisis in Europe. The Washington-based IMF said they have revamped their credit line program to assist countries facing liquidity shocks; thus countries with strong economies can apply when faced with short-term actual or potential liquidity needs. Also providing sentiment a boost was the re-affirmation of US Debt ratings by both S&P and Moody's, although Fitch made it clear the recent failure of the US supercommittee to reach a debt package agreement would most certainly affect the outlook for US debt in a negative way. The Euro had recovered to levels above 1.3560 before disappointing US economic growth once again dampened risk appetite. The economy grew at an annualised rate of 2% in the 3 months till September, less than the 2.5% expected, however higher than the 1.3% growth of the June Quarter. With a mixed bag of data out of the US last night, the Euro opens this morning at similar levels to yesterday, 1.3510; the USD JPY back below 77.00 after yesterday's BOJ intervention speculation.
Data releases:
AUD: CB Leading Index m/m; Construction Work Done q/q
NZD: No data due for release
JPY: Bank Holiday
GBP: MPC Meeting Minutes; BBA Mortgage Approvals
EUR: Flash Manufacturing PMI; Flash Services PMI; Industrial New Orders m/m
USD: Core Durable Goods Orders m/m; Unemployment Claims; Personal Spending m/m; Revised UoM Consumer Sentiment