Daily Forex Forecast 12/02/2011
Australian Dollar: The Australian Dollar started Asian trade notably higher yesterday after a boost in investor sentiment came from some much needed positive news from the Eurozone. Finding a resistance barrier at 1.0290 the Aussie trailed slightly lower throughout the morning and upon the release of Retail Sales for the month of November hit a session low of 1.0190. In the lead up to the festive season and in the shadow of better than expected US retail figures earlier this week, markets were noticeably disappointed with the 0.2% growth figure, falling short of their 0.4% expectation.
Trading with a bias to the downside, the Australian dollar touched an intraday low of 1.0155 before impressively pushing back above 1.0200 to settle around 1.0230 this morning. Short of the unexpected from Europe the key risk event heading into the weekend is the release of monthly Non-Farm Payrolls from the US tonight, a fundamental release with a known capacity to shift risk sentiment.
We expect a range today of 1.0150 – 1.0270
New Zealand Dollar: Speculation of unity in the Eurozone and somewhat hopeful US manufacturing levels in November has boosted risk sentiment enough for higher-yielding assets such as the New Zealand Dollar to hold onto the majority of Wednesday night’s gains. Spending the local session oscillating between 0.7760 and 0.7810 this trend continued offshore despite a brief fall to 0.7725. The NZD/AUD also managed to consolidate above 0.7600 helped out by disappointing retail sales in Australia, trading this morning at 0.7615. Direction for the Kiwi into close of markets is likely to come from key unemployment data due this evening from the US and pending the unexpected we see the New Zealand Dollar remaining in recent ranges in the lead up to this release.
We expect a range today of 0.7720 – 0.7810
Great British Pound: The UK’s manufacturing sector shrank at its fastest pace in 18 months during November; a sure sign global demand is weakening. With the ISM manufacturing PMI index coming in at 47.6, Sterling still managed to hold its own in a market trading sideways for the session as the figure was not as bad as anticipated.
After touching lows near 1.5640, Sterling saw a mild relief rally to touch highs around a cent higher before settling back to the middle of recent ranges at 1.5680/90. On the cross-rates, Sterling has gained some insignificant ground against the Australian Dollar, buying $1.5340, and against the New Zealand Dollar buying $2.0160
We expect a range today of 1.5260 – 1.5410
Majors: The Euro has consolidated gains made earlier this week as hope remains in the markets major eurozone countries will work closely together to overcome the regions debt crisis. For the fourth straight session last night the shared currency gained against the Greenback on decent demand at Spain’s bond auction and Sarkozy’s plan of action. In the southern port town of Toulon President Sarkozy outlined a wide range of reforms including automatic sanctions for countries that don’t respect budget rules, and on these developments the Euro has remained supported primarily above 1.3450 since the beginning of the European session yesterday.
With sentiment also helped along by a stronger than expected ISM manufacturing index highs near 1.3520 were reached before settling to start the final day of trade this week at 1.3460. The USD/JPY, helped along by the US manufacturing data, has rallied mildly to pare some recent losses and trades this morning at 77.70 ahead of US Non-Farm Payrolls this evening.
Data releases:
AUD: No data due for release
NZD: No data due for release
JPY: Capital Spending q/y; Monetary Base y/y
GBP: Construction PMI
EUR: PPI m/m
USD: Non-Farm Employment Change; Unemployment Rate; Treasury Currency Report