Daily Forex Forecast 30/03/2011
Australian Dollar: The Australian dollar appears well and truly consolidated above 1.0200 for the time being as support held strong overnight. A subdued Asian session saw little response as New Home Sales growth slowed to 0.6% in Feb with the dollar remaining above 1.0230 for the most part.
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Contrary to the past few weeks, the Aussie lost ground into the early London hours falling within a hair's width of $1.02 although recent risk appetite and equity and commodities gains, along with an unexpected drop in US Consumer Confidence, assisted a recovery back through to test $1.03.
Indications from US and Europe's central banks that they are to soon stop asset-repurchasing programs has boosted riskier assets and we open this morning still elevated at 1.0290. Local data is thin today as investors await tomorrow's retail sales and Building Approvals.
We expect a range today of 1.0220 - 1.0310
New Zealand Dollar: The New Zealand Dollar has been the main benefactor from offshore events yesterday, where the nearing end to quantitative easing has boosted investor appetite for risk. The strong bullish momentum gained from this has been supported by the country's first posted trade surplus in almost 10 years.
Although not as high as expected, New Zealand still reported a 194M dollar surplus and this helped the Kiwi push off support levels around 0.7500 and rally to highs near 0.7580. Opening today at 0.7570 and higher against the Australian Dollar at 0.7350, further key fundamental data is due to be released in the form of Building Consents early this morning.
We expect a range today of 0.7510 - 0.7590
Great British Pound: Sterling has remained near its weakest levels in five months against the Euro and slipped further against the US Dollar as it was revealed the U.K. economy shrank by 0.5% in the fourth quarter of last year. Although the decrease in output was 0.1% less than expected, the Pound still headed south to re-test yesterdays lows near 1.5940.
USD weakness and an increase in risk appetite have helped Sterling recover somewhat and we open this morning just back above the $1.60 handle. With the Pound being the worst performing currency this month when compared against a basket of 10 developed market counterparts, it is no surprise we see the GBP/AUD back down at 1.5550 this morning and GBP/NZD at 6-week lows near 2.1150.
We expect a range today of 1.5510 - 1.5640
Majors: Portugal and Greece both had their debt ratings cut once more yesterday, this time by S&P who believe the risk of the countries defaulting on their debt obligations is increasing with new European Union bailout rules. Portugal's cut is the second this week and they now stand at -BBB which is the lowest investment-grade rating and also three grades worse than Ireland.
Although the Euro gave up short-term gains and dropped to 1.4050 overnight, it does seem markets appear to be viewing the drama as old news and the announcement itself appeared to have little impact. Back above 1.4100 this morning against the Greenback, the Euro has also made ground on the Yen reaching multi-week highs above 116.00.
Japan's currency has weakened against all of its major counterparts as European and US central banks seem closer to ending stimulus programs as the global economy recovers. This pushed the Greenback further out of its post-intervention trading range to reach 82.45 against the Yen.
Data releases
AUD: No data due for release
NZD: Building Consents m/m
JPY: Prelim Industrial Production m/m
GBP: CBI Realized Sales
EUR: No data due for release
USD: ADP Non-Farm Employment Change; Crude Oil Inventories
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