ClearFX Daily Commentary - 18/05/2011

Australian Dollar:

The Australian Dollar Rose yesterday, snapping a four day losing streak against its US Counterpart. With minutes from the RBA''s most recent meeting being released, the general consensus showed that while there remains an ongoing divergence between the prosperity of different sectors of the economy, the board remains prepared to raise the benchmark cash rate should inflationary pressures continue to mount. With the Aussie dollar being bought throughout the afternoon session, weak US economic data supported the currency even further helping it trade as high as 1.0627 overnight. With the Westpac Consumer Sentiment Survey due for release today the Australian Dollar opens this morning buying 1.0617 US Cents

We expect a range today of 1.0570 – 1.0680

New Zealand Dollar:

With little in the form of economic fundamentals being released yesterday the New Zealand Dollar remained choppy, trading between a range of 0.7764 and 0.7847 against its US Counterpart. The Kiwi opens this morning around 40 Basis Points higher than the same time yesterday as global equities and Greenback weakness further supported the New Zealand Dollar. Volatility is expected to remain today as we see the release of the Producer Price Index which is due out for release this morning. Meanwhile the New Zealand Dollar is currently trading at a rate of 1.3554 against its Trans-Tasman rival.

We expect a range today of 0.7750 - 7890

Great British Pound:

The Great British Pound came to life in the afternoon of the Asian session yesterday. Spurring the Sterling higher was the release of core infationary data showing the Consumer Price Index beating expectations of 4.2%, coming in higher at a rate of 4.5%. With such accelerated inflation the stage now appears set for the Bank Of England Governor, Mervyn King to explain publicly why officials have yet to raise the official cash rate. Off the back of such news the pound extended its gains overnight and after initially opening yesterday at a rate of 1.6164 it managed to get as high as 1.6302. Today we see the Sterling open at a rate of 0.6539 against the Australian Dollar

We expect a range today of 1.5220 - 1.5335

Majors:

Overnight the market saw the release of both US Housing Starts and Industrial Production Figures. With both results disappointing the market investors took the opportunity to sell the Greenback across the board. With Global Equities, Commodities, Gold and Silver all losing ground it was the fundamentally poor results out of the US which has posed an even further hurdle towards the ambitions of the Federal Reserve, to spur growth and reassert production as the driving force behind a sustained recovery. Meanwhile in the EURO Zone, Sovereign Debt Concerns continue to dominate headlines with economic leaders revealing overnight that the initial bailout figure (110 Billion) for Greece may not be sufficient to restore Financial Stability. While the EURO opens slightly higher this morning at a rate of 1.4155, the Yen fell the most in 3 weeks and is currently trading at a rate of 81.36 against the greenback

Data releases

AUD: Westpac Consumer Sentiment

NZD: PPI Input y/y, PPI Output y/y

JPY: No Data

GBP: Unemployment Rate, MPC Meeting Minutes, Average Earnings Index 3m/y, Nationwide Consumer Confidence

EUR: No Data

USD: FOMC Meeting Minutes