Daily Forex Forecast 22/03/2011
Australian Dollar: The Australian Dollar (1.0050) moved slowly and steadily upwards in Asian trade yesterday as commodities in general started the week on a firmer foot and news out of Japan confirmed that 2 out of the 6 reactors at the Fukushima Nuclear Power Plant were under control.
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High yielding currencies like the AUD, NZD and CAD have bore the brunt of selling over the last several days but Friday's G7 intervention to curb the appreciating Yen has alleviated some fears in the market with risk appetite slowing creeping back in. In the offshore session, the currency remained above parity against the greenback. With little in the way of top tier data this week, the Australian Dollar will take direction from offshore events and happenings.
We expect a range today of 1.0000 - 1.0100
New Zealand Dollar: The New Zealand Dollar staged a minor rally during Asian trade on Monday moving to a high of 0.7325 against the greenback, however the gains were limited ahead of key economic data scheduled for release this week. Traders also remain mindful of the events which continue to unfold in Japan and the Middle East. Domestic growth data is expected to show a rise of 0.2 per cent for the fourth quarter of 2011; however a second period of negative growth cannot be ruled out putting New Zealand in a technical recession. In overnight trade the kiwi moved between a low of 0.7315 up to a high of 0.7359 ahead of this morning's opening level of 0.7340.
We expect a range today of 0.7300 - 0.7400
Great British Pound: Risk appetite returned to currency markets overnight which saw the pound rally against the greenback to open today at 1.6300. Sterling hit a 24-hour high of 1.6327 after a report revealed UK house prices squeezed marginally higher in March. Whilst the Bank of England may be forced to raise rates to tackle inflation, it is likely to lag behind the European Central Bank who are likely to raise rates next month. The Euro is trading near 4-month highs (0.8700) against the Pound. Meanwhile, the pound opens marginally lower against both the Australian Dollar (1.6220) and the New Zealand Dollar (2.2200).
We expect a range today of 1.6140 - 1.6240
Majors: As signs emerge in Tokyo that progress is being made to repair the damaged cooling systems of the Fukushima Nuclear Power Plant, the Japanese Yen (81.00) weakened for a second consecutive day. Last week's co-ordinated response by the Group of Seven nations is continuing to have the desired effect in bringing the currency down from post-war highs. Investors tentatively took on board risk overnight prompting rallies in commodity-linked currencies such as the Australian and Canadian Dollars. The Swiss Franc (0.9050) has retreated from all-time highs. Meanwhile, the Euro (1.6300) moved higher overnight as interest rates are tipped to be raised as early as next month by the European Central Bank.
Data releases
AUD: No data today
NZD: No data today
JPY: All industry activity index (Jan)
GBP: Consumer Price Index (Feb)
EUR: No data today
USD: House price index (Jan)
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