Daily forex forecast - 21/01/2011
Australian Dollar: This morning the Aussie opens lower at 0.9879 versus the Greenback. Hotter Chinese growth figures fueled speculation policy makers in China will continue raise interest rates to cool economic growth. China's growth accelerated 9.8% last quarter exceeding expectations and outpacing 3rd quarter figures of 9.6%.
[Get this delivered to your inbox for FREE. Subscribe to our daily Markets Newsletter.]
The Aussie reversed its 3 day gains against the US Dollar as investors abandoned higher yielding assets. Overnight the Aussie fell to 0.9830, its lowest level in a week.
We expect a range today of 0.9800-0.9940
New Zealand Dollar: Consumer prices in New Zealand's increased 2.3% in the 4th quarter after the government increased taxes on goods and services. Deeming it a onetime effect of the increased sales tax, the Kiwi fell as statistics agency officials told reporters underlying price pressures increased 0.3% excluding changes in GST. With underlying inflation subdued traders hedged their bets on the likelihood the central bank will remain 'prudent'. The Kiwi traded sideways for most of the day bouncing between 0.7626-0.7660 US Dollars before falling to a 3 week low of 0.7530 offshore. This morning the New Zealand Dollar opens at 0.7580 ahead of retail sales figures.
We expect a range today of 0.7530-0.7640
Great British Pound: A wave of risk selling prompted by concerns over China during Asia saw the Pound slide towards 1.5900 against the US Dollar. Moving offshore the Sterling recovered its lost ground in the lead up to CBI's manufacturing forecast report. Manufactures recorded a drop in orders of -16 in December, down from -3 in November. Gains were capped at 1.6010 US ahead of the US session where the Pound dropped to 1.5835 against the Greenback amid better than expected US unemployment and housing figures. Meanwhile the Pound opens at 1.6097 and 2.0961 against the Aussie and Kiwi respectively.
We expect a range today of 1.6030-1.6215
Majors: Better than expected economic data from the US boosted the Greenback sharply against the Japanese Yen. The US Dollar touched 83.11 Yen after unemployment and existing home sales markedly improved. Unemployment claims printed 404K versus 441K previously while home sales increased jumped 12% in December to 5.28 million. The Philly Fed manufacturing index broke the trifecta falling short of expectations of 20.7 but still reporting a solid 19.3. Meanwhile the Euro reached 1.3522 against the US Dollar overnight before falling below 1.3400 on Dollar strength.
Data releases
AUD: Quarterly Import Prices
NZD: Retail Sales
JPY: All Industry Activity Index (NOV)
GBP: Retail Sales, Prelim Mortgage Approvals
EUR: German Ifo Business Climate
USD: No Data Today