Daily forex forecast - 4/2/2011
Australian Dollar: The Australian Dollar has jumped from yesterday's open of 1.0070/80 to highs near 1.0160 after a volatile offshore session. A considerable increase in local building approvals month on month and a smaller than expected fall in the Trade surplus meant Asia saw a push to 1.0120, especially seeing as though the recent natural disasters in Queensland have cast doubt on our export industry.
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Another sharp rally early on in London trade saw a return to Wednesday's highs of 1.0140 and after a brief dip the Aussie is now pushing to the 1.0160 level. The recent weakening of the Euro has also seen the Australian Dollar gain more than 1.5% against the shared currency. Today sees the RBA's monetary policy statement, which markets will watch closely in order to gain insight into likelihood of potential interest rates rise.
We expect a range today of 1.0080 - 1.0170
New Zealand Dollar: An unexpected rise in New Zealand's unemployment rate meant the Kiwi started an otherwise quiet local session on the back foot. Coming in at 6.8% compared to last quarter's 6.4%, the country's dollar immediately fell from 0.7776 to 0.7727 and continued lower to enter off-shore trade around 0.7710. Adding to pressure on the Kiwi was the NZ finance minister calling a strong local dollar an 'impediment' to export growth. Bill English, who also serves as deputy Prime Minister, said in an interview yesterday the government needs to ensure their actions and policies are not "putting upward pressure on interest or exchange rates". He also said "it's hard to see the general pressures that would push it up." Thus the Kiwi struggled to recover losses incurred earlier in the day and currently trades at 0.7730 against the Greenback and 0.7615 against the Aussie.
We expect a range today of 0.7680 - 0.7750
Great British Pound: The Great British Pound traded quietly during Asian trade yesterday, pushing carefully towards the 1.6200 handle. A solid break above this level was soon seen as the UK PMI Services Index expanded in January, reaching 54.5 compared with the previous contraction of 49.7 and the expected 51.3. Yesterday's high of 1.6230 was easily taken out and Cable moved to almost 1.6280 which is the highest level seen since early November.
Recent bullish momentum failed to hold Sterling at these levels however and with the help of a rallying US Dollar supported by US unemployment and PMI figures, a retreat back to 1.6120 was witnessed throughout the North American session. Opening today the Pound is 1.6140 against the Greenback, 1.5900 against the strengthening Aussie and 2.0870 against the New Zealand Dollar.
We expect a range today of 1.5840 - 1.5990
Majors: The Greenback gained and the Euro lost overnight as both Trichet and Bernanke took centre stage. The European Central Bank kept interest rates on hold at 1% at their Feb 3rd meeting and declared they currently believe inflation risk to be 'broadly balanced' Markets , taking this as a sign interest rates are not to rise in the near future, reacted bearishly towards the Euro and the single currency had 200 points wiped from its session high. Reaching lows of 1.3610 this has been reported to be the largest daily loss against the US Dollar since November. Bernanke spoke at the National Press Club Luncheon in Washington DC last night, following local Unemployment Claims and ahead of tonight's Non-Farm Payrolls. He stated that the US needs to see faster and more sustained job growth for a sufficient length of time before policy makers can be sure the economic recovery has taken hold. Projecting moderate output growth, this left him to assume it will be several years before such levels are reached. With the underlying tone appearing to provide ongoing support to Quantitative easing strategies, and better than expected unemployment and non-manufacturing PMI figures the Greenback rallied and pushed through 82.00 against the Yen before a bounce back sees opening levels this morning closer to 81.60.
Data releases
AUD: RBA Monetary Policy Statement
NZD: Visitor Arrivals m/m
JPY: No data due for release
GBP: Halifax HPI m/m
EUR: No data due for release
USD: Non-Farm Employment Change; Unemployment Rate
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