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Daily Forex Commentary
Friday, May 16, 2008 - Market Commentary:: Australian Dollar: Heavy selling during local trade yesterday saw the Aussie dollar decline to momentarily trade below support at 93 cents. After exchanging at a low of 0.9290, the AUD/USD bounced back to post a European high of 0.9385 with better than expected Euro-zone GDP data providing the stimulus for the move. Nervous investors took some profit to see the AUD back around 0.9350 heading into the U.S trading day with demand for the Aussie returning shortly thereafter. Despite some positive U.S economic data it rallied back to an overnight high of 0.9415 after a rebound in gold and silver to open this morning at 0.9395.
- We expect a range today in the AUD/USD rate of 0.9370 to 0.9420.
:: Great British Pound: The Pound Sterling opens this morning relatively unchanged from its Asian close yesterday at 1.9475 despite having experienced a very volatile overnight session. GBP/USD bounced back from its overnight lows at 1.9405 to exchange at a high near 1.9500 with some positive U.S economic data triggering some selling during late trade. A rebound in the Aussie dollar hurt the cross rate which had appeared to be on the road to recovery yesterday, peaking at 2.0920 but falling to this mornings open of 2.0710.
- We expect a range today in the GBP/AUD rate of 2.0650 to 2.0750.
:: New Zealand Dollar: The Kiwi dollar fell to three month lows during yesterday’s local session after retail sales declined at three times the pace expected by economists. Analysts are now attempting to predict the timing of a possible interest rate cut by the RBNZ and as such the NZD traded heavily, reaching a low of 0.7535 during late European trade. An increase in risk appetite by U.S investors, profit taking on the NZD/AUD cross rate and a massive short squeeze triggered a rally during NY trade to see it open back at 0.7625.
- We expect a range today in the NZD/USD rate of 0.7590 to 0.7640.
:: Majors: The Euro received a boost during early offshore trade as advanced estimates of Euro-Zone Q1 GDP indicated a better than expected 0.7% increase in economic growth during the first three months of the year. EUR/USD rallied from 1.5480 to post an overnight high of 1.5545 before pulling back ahead of the release of several pieces of U.S economic data. The Greenback received a boost from 80.4 billion dollars in net long term TIC flows during March which measures capital flow into U.S. denominated assets and an improvement in the manufacturing sector in Philadelphia. EUR/USD fell to 1.5420 however USD/JPY struggled to rally hovering between 104.50 and 105.15 for the majority of the offshore session. Investors are now anticipating tonight’s release of U.S Housing Starts, University of Michigan Confidence survey and European Trade balance for further direction on the majors.
:: Data Releases:
- AUD: No Data Expected today
- NZ: Q1 Producer Prices
- EUR: Mar Trade Balance
- UK: No Data Expected today
- US: Apr Housing Starts, Apr Building Permits & May UoM Confidence
- JPN: Mar Industrial Production Forecasts & Apr Consumer Confidence
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