Money and Forex Blog

:: Australian Dollar: The Australian dollar opens weaker today at 0.8450 against the US dollar after pushing back from Friday’s early offshore rally above 0.8500. Volatility returned to the market as Fitch downgraded Spain’s sovereign debt and investor’s sought safety in the US dollar. Despite US consumer confidence increasing, sluggish US spending and production drove the Aussie down to an intraday day low of 0.8428. Today sees a number of Australian data releases ahead of tomorrow’s RBA meeting where the central bank is expected to keep rates on hold at 4.5%.

- We expect a range today in the AUD/USD rate of 0.8390 to 0.8500

:: Great Britain Pound: After reaching 1.4610 US dollars, it highest level in over a week, the Pound fell after Consumer confidence figures revealed a drop of -18 in May, deteriorating for the third month in a row to a 5 month low. The prospect of another tax hike combined with uninspiring comments from members the Bank of England is certainly weighing on the nation’s morale. With an increase in the interest rate unlikely the Pound opens today buying 1.4430 US. Meanwhile the Pound opens slightly weaker against the Aussie and Kiwi buying 1.7560 AUD and 2.1285 NZD.

- We expect a range today in the GBP/AUD rate of 1.7040 to 1.7150

:: New Zealand Dollar: The Kiwi followed the Aussie down after initially breaking above 0.6850 USD, its highest since May 20, in offshore trade on Friday extending its monthly decline against the Greenback. The Kiwi dropped to 0.6750 USD after Spain’s downgrade kept investors nervous and US data revealed consumer spending remained flat despite US incomes increasing 0.4%. The Kiwi opens today at 0.6770 ahead of today’s NZ business confidence figures.

- We expect a range today in the NZD/USD rate of 0.6750 to 0.6820

:: Majors: After beginning in Asia below 91 an unexpected 0.5% increase in April Retail Trade was not enough to strengthen the Yen as lower than forecast inflation and an increase in the jobless rate sent it lower in trade with the Greenback. The Yen weakened to enter offshore trade at 91.40 against the Greenback however resistance held firm and USD/JPY slid back to a low of 90.60 before finishing the week at 90.90. Hot on the heels of the banking crisis in Spain ratings agency Fitch downgraded the countries credit rating one notch from AAA to AA+ putting an end the rally that had begun in early Europe on Friday. After peaking near 1.2450 EUR/USD opens this morning near its lows at 1.2270 with the key 1.2 level remaining in focus for the markets this week.

:: Data Releases:
AUD: May TD Inflation Guauge, Q1 Current Account Balance, Apr HIA New Home Sales & Apr Private Sector Credit
NZD: May NBNZ Business Confidence
USD: U.S Memorial Day Holiday
GBP: May Hometrack Housing Survey
EUR: May Euro-Zone Confidence Survey & May CPI Estimate
JPY: Apr Housing Starts, Apr Construction Orders & BoJ Governor Speaks

:: Australian Dollar: The Australian Dollar opens sharply higher today at 0.8510. Despite a surprise drop in new capital spending, which fell 0.2 per cent in the first quarter, the Aussie rallied from an intraday low of 0.8220. First quarter GDP data is due for release next week with some estimates likely to be revised lower after the capital expenditure figure yesterday. Local equities moved more than 1 per cent higher pushing the unit towards 0.8330 as it headed into the European session. Offshore, once the Aussie broke through resistance at 0.8360, it climbed steadily as global stocks rallied and risk was back on the agenda.

- We expect a range today in the AUD/USD rate of 0.8380 to 0.8590

:: Great Britain Pound: Pound Sterling (1.4580) opens sharply higher against the greenback on Friday. A decline in risk aversion and a move away from the U.S. Dollar as a safe haven were the main reasons for the pound snapping a 3-day losing streak. Only a week ago, the currency was trading at a 14-month low of 1.4231. Meanwhile, the pound has been outperformed by its antipodean rivals and opens at 1.7120 against the Australian Dollar and 2.1300 versus the New Zealand dollar.

- We expect a range today in the GBP/AUD rate of 1.7050 to 1.7180

:: New Zealand Dollar: The New Zealand Dollar opens higher against the greenback today at 0.6825. The Kiwi rallied steadily during local trade on Thursday pushing above US67 cents after New Zealand recorded its first annual trade surplus in eight years. During the offshore session, the unit moved through technical resistance at 0.6720 and rallied steadily after U.S. growth data came in weaker-than-expected sending the greenback lower across the board. Meanwhile, on the cross-rates, the kiwi is buying 0.5530 euro and 0.4691 British Pounds.

- We expect a range today in the NZD/USD rate of 0.6750 to 0.6860

:: Majors: The Yen and the big dollar declined overnight as global stocks rallied dampening the safe-haven demand that has prevailed in recent weeks. The Euro (1.2366) moved higher against the greenback for the first time in three sessions after China said that it remains a long-term investor in Europe. The Chinese foreign exchange regulator said previous reports it was reviewing Euro holdings were “groundless”. Meanwhile, U.S. economic growth came in at an annualised 3 per cent which was less than economists’ forecasts and highlights the headwinds still facing the recovery. In a separate report, weekly jobless claims fell by a less-than-expected 14,000 to 460,000.

:: Data Releases:
AUD: No data today
CAD: No data today
EUR: No data today
GBP: No data today
JPY: Jobless rate & CPI, April
NZD: No data today
USD: Personal Income & Spending, April; Chicago PMI, May

:: Australian Dollar: The Australian Dollar opens lower today at 0.8210 after another turbulent session. A positive lead from local equities helped to support the currency above US82 cents on Wednesday. There was very little reaction to yesterday’s construction data which rose 1.9 per cent to $39.475bio in the March quarter – well below market estimates of 4.0 per cent. During offshore trade, the Aussie rallied sharply above US83 cents as U.K. and European equities moved higher but the move was short-lived and the Aussie was sold heavily once again down to US82 cents after strong U.S. economic data supported the greenback.

- We expect a range today in the AUD/USD rate of 0.8120 to 0.8290

:: Great Britain Pound: Pound Sterling (1.4380) opens marginally lower today against the greenback. The currency was buoyed early in the session after a 2 per cent rally on U.K. equities however stronger-than-expected U.S. economic data released late in the session curtailed moves to the top side as the greenback strengthened across the board. In overnight trade, the pound moved between a high of 1.4447 and a low of 1.4329. Meanwhile, the pound is stronger against both the Australian Dollar (1.7500) and the New Zealand Dollar (2.1695).

- We expect a range today in the GBP/AUD rate of 1.7450 to 1.7560

:: New Zealand Dollar: The New Zealand Dollar opens lower today against the greenback at 0.6620. During yesterday’s local session, the unit “topped out” at US67 cents and spent most of the day trading around the 0.6650 area. In overnight action, the unit rallied sharply towards 0.6740 as U.K. and European equities moved higher but the move was short-lived and the Kiwi was sold heavily once again down to US66 cents after strong U.S. economic data supported the greenback. On the cross rates, the kiwi has lost a little bit of ground on the Aussie and opens at 0.8070.

- We expect a range today in the NZD/USD rate of 0.6510 to 0.6680

:: Majors: The Greenback opens stronger against the Euro (1.2180) and is steady against the Japanese Yen (89.90), underpinned by better-than-expected economic data. New home sales in the United States surged 15 per cent to an annual pace of 504,000 – a two-year high. In a separate report, bookings for durable goods rose last month by 2.9 per cent. Meanwhile, investors lost their nerve once again late in the session and took the Euro down towards fresh 4-year lows at 1.2166 on continuing concerns the European debt crisis will impact growth in the region.

:: Data Releases:
AUD: CAPEX, Q1
CAD: No data today
EUR: German CPI, May
GBP: No data today
JPY: Merchandise Trade Balance, April
NZD: Trade Balance, April
USD: GDP, Q1

:: Australian Dollar: It has been another volatile 24 hours for the Australian Dollar which opens today at 0.8261. Risk aversion and a sharply weaker local equity market on Tuesday took the unit down to 0.8120. The sell-off continued in Europe with the Aussie testing the 10-month low of 0.8060 amid fresh concerns over the stability of Europe’s financial system. Stronger-than-expected U.S. consumer confidence led to a late rally on Wall Street and the Aussie recovered some lost ground. 0.8060 – 0.8360 has been the range over the last few days and we may briefly test the higher end this morning if there is a positive lead on the local share market.

- We expect a range today in the AUD/USD rate of 0.8060 to 0.8360

:: Great Britain Pound: Pound Sterling opens marginally lower against the greenback at 1.4400 after some positive economic data. First quarter gross domestic product rose 0.3 per cent compared to the final 3 months of 2009. A separate report showed manufacturing surged 1.2 per cent – the most in three years. Sterling is likely to remain under pressure however amid continued risk aversion and a strengthening greenback across the board. Meanwhile, the pound is lower against both the Australian Dollar (1.7390) and the New Zealand Dollar (2.1480).

- We expect a range today in the GBP/AUD rate of 1.7340 to 1.7520

:: New Zealand Dollar: The New Zealand Dollar opens at 0.6690 today and remains under pressure as fear and panic grip currency and equity markets. The kiwi hit at 10-month low of 0.6559 during early European trade amid fresh concerns over the stability of Europe’s financial system. Stronger-than-expected consumer confidence data released overnight in the United States also strengthened the greenback against several major currencies. Volatility and wider-than-normal trading ranges are expected to continue this week.

- We expect a range today in the NZD/USD rate of 0.6580 to 0.6790

:: Majors: The Euro remains under extreme pressure across the board and opens at 1.2340 against the greenback. The-16-nation currency hit an overnight low of 1.2176 amid continued concerns about the debt crisis in Europe and comments from the International Monetary Fund that Spain had been too slow in strengthening its banking system. Risk assets were sold heavily overnight with the Canadian Dollar hitting a 6-month low. Meanwhile, the big dollar opens at 90.20 against the Japanese Yen after U.S. consumer confidence increased in May. The index rose to a 2-year high of 63.3, exceeding economists’ forecasts.

:: Data Releases:
AUD: Westpac Leading Index, March
CAD: No data today
EUR: No data today
GBP: No data today
JPY: No data today
NZD: No data today
USD: Ben Bernanke Speech; Durable Goods Orders & New Home Sales, April

:: Australian Dollar: Volatility continued yesterday with the Aussie opening at 0.8320, then hitting an intraday low of 0.8184 before bouncing back to 0.8300 – and this was just the first few hours. Risk aversion and a wave of selling out of Japan kept the local unit pinned down during the domestic session. The Aussie hit a 24-hour high of 0.8350 during the European session before succumbing once more to a stronger greenback after U.S. existing home sales came in stronger-than-expected surging 7.6 per cent in April for the strongest reading in six months.

- We expect a range today in the AUD/USD rate of 0.8150 to 0.8350

:: Great Britain Pound: The pound opens steady against the greenback today at 1.4420 as the U.K’s new Chancellor of the Exchequer George Osborne announced GBP6.25bio worth of budget cuts. Fiscal deficit concerns have plagued Sterling this year and broader plans will be announced at an emergency budget set down for June 22. In overnight trade, the pound moved between a low of 1.4351 and a high of 1.4527. Meanwhile, the pound is higher against both the Australian Dollar (1.7443) and the New Zealand Dollar (2.1540).

- We expect a range today in the GBP/AUD rate of 1.7350 to 1.7510

:: New Zealand Dollar: The New Zealand Dollar opens US1-cent lower today at 0.6690 after another tumultuous session. The kiwi followed a weaker Australian Dollar lower during Monday’s domestic session hitting 0.6688. A rally during the European time zone was short-lived as the greenback strengthened across the board after U.S. existing home sales came in stronger-than-expected surging 7.6 per cent in April for the strongest reading in six months. With the 16-nation Euro zone currency shedding last week’s gains overnight, risk currencies such as the Aussie and the kiwi are expected to remain volatile and under pressure today.

- We expect a range today in the NZD/USD rate of 0.6610 to 0.6820

:: Majors: Last week’s 1.7 per cent gains on the Euro largely evaporated overnight on speculation European financial institutions linked to Greek debt holdings may face losses. The 16-nation currency opens at 1.2360 against the greenback after hitting a session-low 1.2343. Fuelling the renewed bout of negative sentiment was news that the Spanish Central Bank appointed a provisional administrator to run CajaSur – a savings bank crippled by property loan defaults. Meanwhile, the big dollar opens higher against the Japanese Yen at 90.25.

:: Data Releases:
AUD: No data today
CAD: No data today
EUR: No data today
GBP: GDP, Q1
JPY: No data today
NZD: No data today
USD: House Price Index, March; Richmond Fed Mfg, Consumer Confidence, May

:: Australian Dollar: The Aussie opens at 0.8310 on Monday. Unsubstantiated rumours of Reserve Bank intervention and technical support just above US80-cents halted the recent dramatic slide in the currency on Friday. The Australian Dollar endured another session of extreme volatility trading as low as 0.8070 after a poor lead from local equities. The unit climbed from 10-month lows to a 24-hour high of 0.8364 as global equity markets stabilised. Until there is a clear sign of some sort of solution to the fiscal crisis in Europe, risk currencies such as the Australian Dollar are likely to remain volatile and under pressure.

- We expect a range today in the AUD/USD rate of 0.8180 to 0.8380

:: Great Britain Pound: Pound Sterling posted another week of declines against the big dollar and opens on Monday at 1.4468. Concerns over fiscal debt in Europe and the United Kingdom are hanging over the pound like volcanic ash and there is no breeze on the radar. However, the pound is having a better time against the underperforming risk currencies of Australia and New Zealand and opens the new week at 1.7360 and 2.1300 respectively.

- We expect a range today in the GBP/AUD rate of 1.7300 to 1.7480

:: New Zealand Dollar: The New Zealand opens at 0.6770 on Monday after another volatile session on global currency and equity markets as European Union officials continue to work on a solution for the lingering debt crisis. The kiwi traded between a low of 0.6635 on Friday up to a high of 0.6815. A rise of 3.4 per cent in New Zealand consumer confidence was largely ignored by local market participants as the kiwi''s trans-Tasman rival sunk to a 10-month low of 0.8070. The kiwi has picked up some ground against the Australian Dollar and opens today at 0.8140.

- We expect a range today in the NZD/USD rate of 0.6680 to 0.6820

:: Majors: The Euro moved to a one-week high of 1.2671 on Friday night as investors bought the currency after several days of steep declines. Against the greenback, the unit opens at 1.2544. Temporary support for the 16-nation currency emerged as EU officials pledged to tighten sanctions on high-deficit member countries and said that no European country will be allowed to renege on its debts. Despite global equity markets stabilising somewhat on Friday, currency traders are likely to remain nervous early this week. Meanwhile, the big dollar opens marginally higher against the Japanese Yen today at 90.33.

:: Data Releases:
AUD: Vehicle Sales, April
CAD: No data today
EUR: No data today
GBP: No data today
JPY: No data today
NZD: No data today
USD: Chicago Fed Manufacturing Index; Existing Home Sales, April