However, as global equity markets remain on edge and commodities settle down, the unit fell sharply during the new York session hitting a four-week low of 1.0519. Support for the currency lies around these levels and should hold on Monday ahead of tomorrows release of the minutes from the May meeting of the Reserve Bank of Australia where the cash rate was left on hold at 4.75 per cent.
We expect a rage today of 1.0510 - 1.0600
The New Zealand Dollar (0.7845) opens weaker today against its US counterpart. After hitting a 24-hour zenith of 0.7963 during the European session, the kiwi fell back sharply to a 10-day low of 0.7835. There is support for the currency around the US78-cent mark however it may be tested early this week as the local market continues to digest comments from RBNZ governor Mr Allan Bollard on Friday that he wont be lifting interest rates any time soon. In a column for the Press newspaper, Mr Bollard noted "it is appropriate for monetary policy to remain supportive, given the continued downside risks to economic activity". Meanwhile, the kiwi opens lower today against its trans-Tasman rival at 0.7420.
We expect a range today of 0.7800 - 0.7875
Pound Sterling hit a 6-week low of 1.6146 against the greenback on Friday night and opens the new week at 1.61200. A bout of risk aversion took the currency from an intraday high of 1.6307. The outlook for interest rates is likely to keep a lid on Sterling near-term as the UK economy is being outperformed by its French and German counterparts. Sterling is weaker against the Euro at 0.8700. The Bank of England left rates on hold at 0.5 per cent at its most recent meeting and markets have revised expectations for the next rate rise to as far as January 2012. Meanwhile, the pound opens lower against the Australian Dollar (1.5310) and higher against the New Zealand Dollar (2.0630).
We expect a range today of 1.5285 - 1.5350
The Euro (1.4075) hit a six-week low of 1.6146 against the greenback on Friday amid concerns that Greece will need to restructure its debt arrangements. The 16-nation currency wa buoyed early in the session moving to a high of 1.4338 as Euro zone gross domestic product rose 0.8 per cent in the first quarter, powered by expansion in Germany and France. The gains were short-lived however and t he currency fell heavily during the New York session as equities and commodity prices came under pressure. Despite the strong growth data and the prospect for higher interest rates in Europe, the currency has fallen from 1.4939 reached on May 4, 2011. Meanwhile, across the Atlantic, the greenback climbed steadily against the Japanese Yen and opens today at 80.87. The closely-watched University of Michigan consumer confidence report surged to a three-month high of 72.4 from 69.8 in April. U.S. consumer prices also rose 0.4 per cent in April as increases in food and fuel costs filter through to goods and services.
Data Releases
AUD: Home loans and investment lending, March
NZD: No data today
JPY: Consumer confidence, April
GBP: No data today
EUR: Euro zone trade balance, March
USD: Ben Bernanke speaks on US economy
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