United States Dollar: The dollar sold off slightly yesterday on what was a relatively quiet trading day. Volatility fell and investors took stock of positioning ahead of continued talk between EU financial leaders and the Irish government. GBP/USD traded within a tight range, rallying to a high of 1.5945 from 1.5860 levels. MPC minutes released by the Bank of England highlighted global economic worries as explanation for keeping rates on hold, adding that recent positive GDP data was reason enough to hold off and wait for further data before discussing further QE measures. In the US consumer prices fell, adding support to the Fed’s recent decision to print more money to support the economy. CPI came in flat versus an expected rise of 0.1%, putting further pressure on risk assets. Today we have retail sales out in the UK along with industrial order expectations. In the US we have unemployment claims along with manufacturing data out this afternoon.
– We expect a range today in the GBP/USD rate of 1.5820 to 1.5980
Euro: The Euro managed to claw back some ground yesterday on the back of the belief that sovereign debt worries will be contained. Britain has offered support to its “important neighbour” in the form of £7bn worth of short term loans and / or debt guarantees. Chancellor George Osborne mentioned that it is important to support close trade partners and promote a stable financial environment in the UK by doing so. EUR/USD traded from a low of 1.3460 to an intraday high of 1.3565. We open higher this morning at levels above 1.3620, and it is likely that we may push higher if we hear positive news from Ireland in the form of clear plans over funding requirements. The ECB’s Trichet is speaking this afternoon, which may give us some idea of the ECB’s role in supporting the periphery EU states.
– We expect a range today in the GBP/EUR rate of 1.1620 to 1.1750
Aussie and Kiwi Dollars: Both the Aussie and the Kiwi pushed higher on the positive news, and investors felt comfortable moving back into riskier assets. RBA Deputy Governor Ric Battellino has also been on the wires talking about inflationary pressures in Australia, further supporting the recent decision by the RBA to raise interest rates. AUD/USD pushed from a low of 0.9725 yesterday to an intraday high of 0.9834. Overnight this rally continued and we open this morning at levels above 0.9900. NZD/USD rallied from 0.7630 levels to a high of 0.7725 before pushing on further this morning to levels above 0.7770. We have credit card spending figures out from NZ early tomorrow morning.
– We expect a range today in the GBP/AUD rate of 1.6030 to 1.6230
– We expect a range today in the GBP/NZD rate of 2.0440 to 2.0640
Data Releases:
- AUD: No data of note
- EUR: ECB President Trichet Speaks
- GBP: Retail Sales / CBI Industrial Orders
- NZD: Credit Card Spending
- USD: Unemployment Claims / Philly Fed Manufacturing Index
