United States Dollar: After a fairly sleepy morning session cable turned volatile come the afternoon. It fell to a low of 1.5620 as US markets opened and then promptly gapped to a high of 1.5740 as a short squeeze ensued ahead of the FOMC statement. The move was a little strange given that the pair has traded quietly for the last week and a half. According to some reports the UK Chancellor is expected to announce at next week's budget that Britain will offer 100-year gilts. Osborne is keen to secure record low interest rates against the government’s massive borrowing and hopes it will mean the UK benefits from its current safe haven status for years to come. This helped the move higher in GBP/USD. Positive U.S. data by way of Retail Sales also helped create a "risk on" trading environment. They rose 1.1% in February, the most in five months. Later in the day the Federal Reserve was fairly upbeat in its FOMC statement saying that it expects moderate growth over coming quarters and a gradual decline in unemployment. Bernanke acknowledged that rising oil prices will feed higher inflation but argued that the trend will only be temporary. No reference was made to QE3. Around the FOMC statement bank stress test results were released early too and on the whole were positive. They showed that only 4 of the 19 U.S. banks would fail this time around being Ally Financial, Suntrust, MetLife and Citigroup. GBP/USD opens this morning at 1.5735 ahead of UK unemployment data this morning.
We expect a range today in the GBP/USD rate of 1.5640 to 1.5780
Euro: Its been a bumpy ride lower for EUR/USD over the last 24 hours, this despite the more positive US data and better risk environment. Signs were positive for the single currency yesterday morning after German ZEW beat expectations. The index rose to 22.3 from 5.4 in February and it was the fourth straight increase. But EUR/USD has fallen to 1.3040 after opening yesterday at 1.3140, in part down to the US, Japan and the EU announcing yesterday that it was filing a case against China at the WTO, challenging its restrictions on exports of rare earth materials which are important to the manufacture of many consumer goods. The euro is lower vs. the pound too and GBP/EUR is back through 1.2000 again this morning at 1.2040. European CPI is due for release later this morning.
We expect a range today in the GBP/EUR rate of 1.1980 to 1.2070
Aussie and Kiwi Dollars: Trading in AUD/USD has also been choppy over the last day covering a range of 1.0490/1.0555. Local economic data printed worse than expectations overnight which sees AUD/USD open towards the bottom of the range at 1.0490. Australian housing starts q/q fell by 6.9% vs. -3.9% whilst Westpac Consumer Confidence data showed a fall of 5% in March. NZD/USD meanwhile has trickled lower through Asia in line with EUR/USD and it opens the London session at .8160. GBP/AUD and GBP/NZD trade at 1.4990 and 1.9290 respectively, slightly up on where the two pairs opened yesterdays session.
We expect a range today in the GBP/AUD rate of 1.4900 to 1.5060
We expect a range today in the GBP/NZD rate of 1.9200 to 1.9360
AUD: MI Inflation Expectations, New Motor Vehicle Sales, RBA Bulletin
EUR: CPI, Industrial Production
GBP: Claimant Count Change, Unemployment Rate, Avg Earnings Index
NZD: Business NZ Manufacturing Index
USD: Current Account, Fed Chairman speaks
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