FOREX

The New Zealand dollar bounced from lows on Thursday, benefiting from a broadly softer greenback and after a widely expected decision by the Reserve Bank of NZ to hold rates unchanged and keep a tightening bias.

A sluggish day for the Aussie dollar and commodities is seen as the US dollar appreciated with the better-than-expected results of consumer confidence survey and home sales picking up at this time in the United States.

The AUD has opened weaker this morning continuing on from yesterdays sell off following the release of the CPI data.

A smaller than anticipated rise in the consumer price index took the Aussie from an intraday high of 0.9860 down to 0.9720 in very quick fashion as traders lowered their expectations for an interest rate rise when the Reserve Bank meets next week.

U.S. stocks pared their losses in late trading Wednesday as investors recalibrated their expectations for a major bout of easing by the Federal Reserve to stimulate the economy.

US consumer confidence rose from 48.6 to 50.2 in October, above forecasts centred on a result near 49.2.

The Aussie was largely range bound during yesterday's domestic session moving between 0.9880 and 0.9920 ahead of todays release of third quarter inflation data.

The Australian share market has come off highs reached yesterday, as regulatory hurdles put a dampener on the proposed merger between the ASX and Singapore Exchange.

The AUD has opened slightly weaker this morning after strengthening during the later parts of our trading session yesterday and the start of the offshore session overnight as a result of some unexpectedly strong data for Australian producer prices.

US existing home sales rose by 10pct in September to an annual rate of 4.53million, well above forecasts centred on a rise of 4pct to 4.30 million.

The Aussie spiked sharply above US99 cents during local trade yesterday after stronger-than-expected producer price data (PPI) increased the prospects for an interest rate rise next month.

The German Ifo business sentiment gauge has lifted to the highest levels in 3-1/2 years, lifting from 106.8 to 107.6 in October, and ahead of forecasts centred on 106.5.

The Aussie opens higher on Monday at 0.9850 and received a boost after comments by U.S. Treasury Secretary Timothy Geithner at the weekend's G-20 conference.

Currency and equity markets are on the up trend at today's trading as markets speculate that the G-20 summit scheduled this weekend in South Korea will resolve the currency devaluation issue.

The AUD rallied yesterday before retreating again overnight to below USD 0.9800.

Growth and inflation figures released from China supported their move to increase interest rates earlier this week. Chinese GDP expanded 9.6% for the previous quarter, exceeding expectations, while inflation accelerated at its fastest pace in 23mths at a rate of 3.6%.

While the AUD took a breather yesterday, worn out after its assault on parity over the last few weeks, the break was not for long.

The Australian Dollar rose for the first time in 2 days after its drop to the lowest level in 2 weeks.

The Australian Dollar has opened two US cents lower after China's decision to raise interest rates for the first time in three years.

The People´s Bank of China has increased interest rates for the first time since December 2007. Both the benchmark lending rate and 1-year deposit rate were lifted by 25 basis points.

The Australian Dollar peaked at 0.9955 versus the US Dollar as traders speculated a further hike in interest rates sometime this year following the release of the Reserve Bank's minutes.

Across Asia, regional markets are mainly higher led by a strong performance from bank stocks which are advancing in line with US leads.

External factors especially higher commodity demand from Australia's trading partners will further trigger the rise of the Australian dollar, which is still seeking parity with the U.S. dollar.

The Australian share market closed weaker on Monday, dragged lower by banks and miners, as investors remain cautious about the US economic outlook.

Local stocks closed in the red today, weighed down by concerns about foreclosures for US financial companies and the scrapping of a major joint venture by Australia's two largest listed mining companies.

History was made late Friday night in our Financial Markets when the Australian Dollar traded ever so briefly and in very thin conditions, above Parity with the US Dollar, for the first time since the currency was floated in December 1983.

US retail sales rose by 0.6pct in September, exceeding forecasts for a gain of 0.4pct.

The Australian Dollar hit parity for the first time since it was floated in 1983 following the US Federal Reserve announcing the commencement of its second round of quantitative easing will start in November.

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