ClearFX Daily Commentary - 05/05/2011

Australian Dollar:

The Australian dollar opens this morning at a rate of 1.0742 against the greenback, losing major ground against the US currency for a third consecutive day. Following an announcement from the Central Bank of China stating that the nation’s biggest challenge remains within taming inflation. Fresh concerns were raised surrounding the subsequent follow-on effects given China''s importance as a major trading partner. After recording further losses in the overnight session the rate hit an eventual low of 1.0731. Today we see the market’s attention turn to the release of local Retail Sales figures which are due out at 1130am, with any reading greater than 0.6% having the potential to lift the local unit up again above the 1.08 level

We expect a range today of 1.0705-1.084

New Zealand Dollar:

With Asian equity markets losing ground, falling commodities as well as a government report yesterday showing the nation had the biggest net outflow of residents in over 10 years in March, the kiwi was dragged lower. After initially opening at a rate of 0.7984, further ground was lost in the overnight session with the kiwi dollar trading as low as 0.7865 against the US currency. While the market awaits the release of kiwi employment numbers this morning, we see the kiwi swapping hands at a rate 1.3602 against the Aussie.

We expect a range today of 0.7850- 0.7945

Great British Pound:

The Great British Pound opens this morning relatively unchanged from the same time yesterday currently swapping hands at a rate of 1.6488 against the Greenback. Given a mixed bag of local data including housing and construction figures which disappointed the market the sterling managed to reach an eventual high of 1.6573. Today we see the Bank of England announce its monetary policy decision with the benchmark rate expected to remain unchanged at a rate of 0.5%. Meanwhile this morning the pound is higher against both the Australian dollar (1.5343) and New Zealand dollar (2.0869 )

We expect a range today of 1.5310-1.5420

Majors:

U.S Stocks fell and commodities slumped overnight as the US ADP Employment Report undershot forecasts. With the ADP report providing a potential snapshot for non-farm payrolls due out tomorrow the recent theme of Greenback weakness continued. Despite further signs that the US economy continues to face “persistent headwinds”, the Euro Zone provided some improved signs for investors confidence. The Euro reached its strongest level in 17 months reaching a high of 1.4939 against the US currency amid speculation European Central Bank President Jean- Claude Trichet will signal further interest-rate boosts in a policy meeting this evening. Furthering the support for the EURO was news that a 116 Billion Dollar bailout package of Portugal has been also been approved. Meanwhile the yen appreciated 0.4% overnight currently trading at a rate of 80.617.

Data releases

AUD: Building Approvals m/m, Retails Sales m/m

NZD: RBNZ Gov Bollard Speaks, Employment Change q/q, Unemployment Rate

JPY: Bank Holiday

GBP: Official Bank Rate, Services PMI, Prelim Mortgage Approvals

EUR: ECB Press Conference, German Factory Orders

USD: Unemployment Claims, Prelim Nonfarm Productivity q/q, Fed Chairman Bernanke Speaks, ISM Non-Manufacturing PMI