Daily Forex Forecast 18/2/2011
Australian Dollar: RBA Assistant Governor Philip Lowe's hawkish remarks enabled the Australian Dollar to maintain the previous day's gains. Mr Lowe said global commodity prices were likely to remain elevated and global inflation 'to be quite persistent'. The Aussie remained capped 1.005 against the US Dollar throughout Asia and for most of the offshore session.
[Get this delivered to your inbox for FREE. Subscribe to our daily Markets Newsletter.]
During US trade, higher unemployment claims and strong manufacturing figures out of the Philly Fed fuelled risk buying as the Aussie tested 1.0130. This morning the Australian Dollar opens buying 1.0118US.
We expect a range today of 1.0070-1.0150
New Zealand Dollar: The New Zealand Dollar weakened following a government report showing producers were unable to pass on rising productions onto consumers. Production costs rose 0.9% last quarter with only 0.2% passed onto consumers as consumption in the economy remained relatively weak. Moving offshore the Kiwi remained range bound between 0.7540-0.7565 against the Greenback before spearing ahead to tackle 0.7600. US economic data backed the Fed's positive outlook for the US economy stirring risk appetite as investors assessed the implications of a healthier US economy for the rest of the world. This morning the New Zealand Dollar starts the day at 0.7586.
We expect a range today of 0.7540-0.7630
Great British Pound: Andrew Sentence, Bank of England policy maker, has once again called for interest rates to be lifted citing the central bank's estimates on inflation were too optimistic.. Mr Sentence suggested a modest appreciation in the Sterling would help contain inflation, warning against a 'relaxed' attitude to the Pound's exchange rate. The Pound temporarily dipped to 1.6080 versus the Greenback but quickly recovered to briefly take 1.6185. Hawkish comments from central bank officials from around the world improved investor risk sentiment weakening the Sterling this morning opening lower against the Australian Dollar at 1.5987. Meanwhile the Pound starts the day buying 2.1308 New Zealand Dollars.
We expect a range today of 1.5920-1.6030
Majors: The US Dollar fell to 83.19 against the Japanese Yen following an increase in unemployment claims. Unexpectedly, claimant numbers rose 25,000 to 410,000 for the week ending February 12. Meanwhile consumer prices increased 0.4% while manufacturing in the Philadelphia region expanded strongly. The Philly Fed manufacturing index rose to its highest level since 2004 from 19.3 to 35.9, exceeding estimates of 21.0. The Euro initially depreciated to 1.3535 US when the region's current account deficit printed at -13.3 billion, declining from -10.5 billion prior. Hawkish comments from policy makers and signs of a stronger US economy fed risk taking allowing the Euro to climb above 1.3600.
Data releases
AUD: No Data Today
NZD: No Data Today
JPY: No Data Today
EUR: German Producer Prices (Jan)
GBP: Retail Sales (Jan)
USD: No Data Today
More from Global Markets:
Newsletter: To receive Global Markets update, sign up here