United States Dollar: GBP/USD has continued to grind higher over the last 24 hours and it eventually traded to a high of 1.6273 yesterday. It has dropped off slightly this morning and opens today at 1.6230. The main data release yesterday was the US Empire State Manufacturing Index which printed woefully under expectation at -10.4, the lowest reading since November 2010. The USD was initially sold but soon retraced on the back of mild risk aversive buying. The data gets going today with UK CPI first up. Expectations are for inflation to ease to 2.5% although there are some reports circulating this morning that there may be upside risks to this number following the Olympics and the rise in transportation costs. This number will be followed by German Zew Economic Sentiment and US Current Account numbers. If the CPI number surprises this morning it could bring in to play a break of the April high of 1.6304.
We expect a range today in the GBP/USD rate of 1.6150 to 1.6270
Euro: EUR/USD has consolidated around the 1.3100 figure during the last 24 hours. It pushed through the 1.3160 level yesterday but failed to find any real support or fresh impetus by way of positive EZ news to take it towards 1.3200. There also seems to be some big technical resistance at 1.3170/1.3180. Spanish yields have ticked slightly higher in the last day or so which is weighing on the single currency this morning as well. German ZEW will be the next focus for traders in EUR/USD and it’s particularly important for risk sentiment in the market given the dreadful state of the US Empire State Manufacturing Index released yesterday. Meanwhile and whilst on the subject of risk, tensions continue to rise between China and Japan over the Senkaku/Diaoyu Islands which opens up downside potential for EUR/USD. Following the slight sell off in the single currency GBP/EUR finds itself a little higher this morning at 1.2420.
We expect a range today in the GBP/EUR rate of 1.2370 to 1.2440
Aussie and Kiwi Dollars: AUD/USD has been sold off overnight after the release of the RBA Monetary Policy Meeting Minutes. The central bank indicated that they stood ready to cut interest rates amid the deterioration in the global economic outlook, falling commodity prices and an overvalued Aussie dollar. That said the RBA referred to the AUD not being substantially overvalued indicating that it was reasonably comfortable with it at these levels. Either way the market interpreted the minutes as dovish and AUD/USD has fallen from 1.0530 where it started the London session yesterday to a low of 1.0427 this morning. GBP/AUD is up this morning as a result and trades at 1.5570 currently. NZD/USD has remained firm despite the sell-off of its neighbouring currency and opens this morning at 0.8260. GBP/NZD is also steady at 1.9655.
We expect a range today in the GBP/AUD rate of 1.5480 to 1.5620
We expect a range today in the GBP/NZD rate of 1.9580 to 1.9740
AUD: MI Leading Index
EUR: German ZEW
NZD: Current Account
USD: Current Account, TIC Purchases, NAHB Housing Market Index
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