Money and Forex Blog

:: Australian Dollar: Despite a benign interest rate outlook for the near-term, the Australian Dollar picked up some lost ground towards US90 cents during local trade on Tuesday. The minutes of the Reserve Bank of Australia’s most recent meeting did not contain any surprises and reiterated the economic outlook is evenly balanced. Inflation is forecast to bottom out at 2.75 per cent before rising to the top end of the target band (3.00 per cent) as growth picks up. Having said all of this, the next move in interest rates is still likely to be up, therefore helping to underpin the local currency. Not to mention higher gold this morning (US$1,225.50/oz) and stronger equity markets across Europe and the U.S. overnight which has boosted sentiment. The Aussie opens today at 0.9050.

- We expect a range today in the AUD/USD rate of 0.8990 to 0.9080

:: Great Britain Pound: As expected, growth in U.K. consumer prices slowed in July to 3.1 per cent compared to 3.2 per cent in June. The pound was little-changed after the report trading at 1.5659 but moved lower later in the session as the inflation data pours cold water on any prospect of a near-term interest rate rise in the U.K. The pound opens lower today against the greenback at 1.5580. Tonight, the Bank of England is scheduled to release the minutes of its last meeting. Meanwhile, the pound is sharply lower against both the Australian Dollar (1.7210) and the New Zealand Dollar (2.1880).

- We expect a range today in the GBP/AUD rate of 1.7140 to 1.7230

:: New Zealand Dollar: The New Zealand found some much-needed support around the 0.7040 area during the local session on Tuesday as traders speculated last week’s greenback rally was a shade overdone. Stronger gold and commodity prices also helped underpin the local unit which clawed its way back toward US71 cents. During the offshore session, the unit moved to an overnight high around 0.7140 as equity markets rallied across Europe and the United States, boosting sentiment. However, the kiwi continues to be outperformed by its trans-Tasman rival and opens today at fresh 15-week lows around 0.7860.

- We expect a range today in the NZD/USD rate of 0.7070 to 0.7145

:: Majors: The Japanese Yen weakened marginally overnight as stock market gains across Europe and the United States reduced safe-haven demand. The greenback opens at 85.50 amid continued speculation Japanese policy-makers will intervene to curb Yen strength if it breaks the 15-year high of 84.73 reached on August 11, 2010. The Euro rose as government debt auctions in Ireland and Spain were well received by the market easing concerns the two nations will struggle to contain their budget deficits. The 16-nation currency opens today at 1.2880, compared to 1.2825 this time yesterday. Meanwhile, economic data released in the United States overnight showed wholesale costs increased in July for the first time in four months with the Producer Price Index (PPI) rising 0.2 per cent. Industrial production also rose 1 per cent in July.

:: Data Releases:
AUD: Westpac leading index, June; Wage cost index, Q2
CAD: No Data Today
EUR: Euro Zone Construction output, June
GBP: Bank of England meeting minutes
JPY: Leading Index, June
NZD: No Data Today
USD: No Data Today