ClearFX Daily Commentary - 02/05/2011

Australian Dollar:

The Australian Dollar capped its most successful month since December last year reaching an eventual high of 1.0976 against the Greenback late on Friday evening. With a monthly gain of 6.2 per cent there was further speculation over the course of the weekend that higher than expected inflationary results locally may spur the Reserve Bank of Australia to raise Interest rates before the Federal Reserve later this year. While Treasurer Wayne Swan has announced the strength of the currency does reflect an improving economy, we see the Aussie Dollar poised to break new ground above 1.10 as we open this morning at a rate of 1.0973 against its US counterpart.

We expect a range today of 1.0905 - 1.105

New Zealand Dollar:

The New Zealand Dollar opens this morning at a rate of US80.94 cents, after the kiwi appreciated 6.4 per cent in April, the biggest monthly gain since May 2009. Spurring the kiwi on Friday was the release of the New Zealand Trade Balance figure with an overall widening surplus of NZ$464 million during the month of March against a expected surplus figure of NZ$200 million. Off the back of such results the New Zealand Dollar continued to rally throughout the offshore session eventually breaking through fresh resistance above the 0.8100 US cents mark.

We expect a range today of 0.8040- 0.8120

Great British Pound:

Today the Great British Pound opens slightly higher at a rate of 1.6702 against the greenback after topping out at a rate of 1.6721. With the Royal wedding stealing the show on Friday, volumes were generally lower across the board. Despite the income generated from rocketing tourism the market isn’t expected to throw up to many surprises again today with a further public holiday occurring. With an Interest rate decision expected out of the Bank of England later in the week we see the sterling open marginally higher this morning at a rate of 1.5236 against the Aussie but lower against the kiwi at 2.0630.

We expect a range today of 1.5180 – 1.5245

Majors:

In what eventuated as a relatively subdued day of trading we see the Greenback open this morning unchanged from the same time last Friday against its Euro zone counterpart. With US consumer sentiment coming in at 69.80 against an expected result of 70.00, as well as revised US inflationary expectations coming in at a par level of 4.6 per cent, the greenback remained range-bound throughout the local and offshore sessions. While in Euro Zone news we saw the rate hit an overnight high of 1.4855 as Consumer Price expectations of 2.9 per cent proved accurate and the Euro zone unemployment rate of 9.9 per cent also breeding no fresh life into the Euro Dollar, producing a result as expected. This evening we see the European Central Bank President Jean-Claude Trichet speak in Frankfurt with his comments likely to be closely scrutinised for any further interest rate clues. Meanwhile the EURO is buying $1.4821 this morning and the USD/JPY 81.091

Data releases

AUD: MI Inflation Gauge m/m, HPI q/q, Commodity Prices y/y

NZD: ANZ Commodity Prices m/m

JPY: Average Cash Earnings y/y

GBP: Bank Holiday