Daily forex forecast - 27/1/2011
Australian Dollar: As expected, the local unit was fairly subdued throughout much of the Asian session due to a national public holiday in Australia. The Aussie's attempt to push towards parity was thwarted once again around the 0.9980 area ahead of a gradual pull-back to 0.9950.
Many traders and investors also found themselves on the sidelines in the lead-up to the US Federal Reserve's interest rate decision where, as expected, rates have remained on hold at 0.25 per cent. The Aussie peaked overnight at 0.9997 and opens this morning at 0.9950.
We expect a range today of 0.9900 to 1.0000
New Zealand Dollar: Trade in local currency was slow and steady during the Asian session yesterday as the market awaited key interest rate decisions in the United States and New Zealand. As expected, the Reserve Bank of New Zealand (RBNZ) has kept rates on hold at 3.00 per cent. In the accompanying statement, RBNZ Governor Mr Allan Bollard noted that rates will not be raised until the economic recovery is "more robust". Immediately following the announcement, the New Zealand Dollar moved higher breaking through the 0.77 cents handle. The Kiwi is up against the Australian Dollar and is exchanging at 1.2930.
We expect a range today of 0.7650 to 0.7750
Great British Pound: Pound Sterling is still reeling from Tuesday's weaker than expected GDP data. Against the Greenback, the pound opens at 1.5887 after trading as high as 1.5905 during the overnight session. The minutes of the most recent Bank of England board meeting were released overnight and revealed Martin Weale, who along with Andrew Sentance voted in favour of raising interest rates. The members also noted that "recent developments implied that the risk to inflation in the medium term had probably shifted upwards." Meanwhile, the pound opens at 1.5942 against the Australian Dollar and 2.0623 against the New Zealand Dollar.
We expect a range today of 1.5850 to 1.6050
Majors: As expected the Federal Open Market Committee kept interest rates on hold in the US overnight and advised that rates would remain at ultra-low levels for an extended period. It will also keep its current stimulus package, known as QE2 in place. Despite a positive reading in US New Home Sales (actual 329,000; previous 280,000), the US Dollar failed to gain back the losses it has taken against the EURO with the pair trading between 1.3634 and 1.3720 overnight. The Greenback continues to track sideways against the Japanese Yen despite the data releases stateside and is currently sitting above 82.
Data releases
AUD: MI Leading Index
NZD: RBNZ Cash Rate
JPY: Trade Balance
GBP: CBI Realised Sales
EUR: German PreLim CPI
USD: Durable Goods Orders; Pending Home Sales; Unemployment Claims