ClearFX Daily Commentary - 26/05/2011

Australian Dollar:

The Australian dollar fell to a six week low against the Greenback yesterday trading as low as 1.0439. A report released by the Australian Bureau of Statistics showed that completed construction work rose in the three months ending March 31 by 0.7 percent against an expected increase of 1.4%. With local data disappointing markets and Asian equities also reporting loses, the Australian dollar remains susceptible to further downside movements should the current "risk on" environment continue. Following a positive overnight session with the all important support level of 1.05 again being tested with see the currency open this morning at a rate of 1.0529

We expect a range today of 1.0460- 1.0580

New Zealand Dollar:

While the New Zealand Dollar has appreciated 4.2% against the Greenback over the course of the last three months the early signs for the Kiwi yesterday saw the currency sold to an intraday low 0.7901. As risk aversion came into play this sparked a broader sell off for higher yielding currencies such as the New Zealand Dollar, in what has been a recurring theme this week. Despite a slow start the New Zealand dollar managed to pair back some of its early losses as it entered the offshore session trading as high 0.8012, as we see it open this morning buying 0.7975 US Cents. With the strong inflationary outlook released on Tuesday managing to spark further rumours of a potential interest rate hike in the short-term the kiwi remains at the mercy of a European debt situation which continues to sap investors demand for currencies such as the New Zealand dollar.

We expect a range today of 0.7900-0.8010

Great British Pound:

The Great British Pound opens noticeably higher this morning currently trading at a rate of 1.6272 against its US Counterpart, a cent higher than the same time yesterday. In what was a busy day of economic announcements for the UK, revised GDP Figures released showed the economy grew by 0.5 per cent for the first quarter this year. Despite such figures matching expectations further releases, most notably Company investment and Consumer spending came in well below market expectation, slumping to record lows. Meanwhile the Pound opens higher also against the Australian Dollar currently trading at a rate of 1.5458.

We expect a range today of 1.5390 – 1.5490

Majors:

Commodities gained yesterday for a second day running as US Equity Markets also closed on a positive note. While the S&P 500 increased 0.3 per cent the Greenback remained relatively flat throughout the Asian and US Session with the Dollar Index little changed after climbing as much as 0.5%. This evening the market looks ahead to Prelim GDP figures out of the US with any reading above 2.2% expected to provide support for the Greenback. In EURO Zone news the EURO opens fractionally lower at a rate of 1.4085 against the Greenback with ECB President Trichet due to make an address this evening in Berlin. With investors keen to get some reassurances regarding the financial stability of the area support around the 1.40 level remains crucial. Meanwhile the Yen opens stable at a rate of 81.990 against the US.

Data releases

AUD: RBA Deputy Gov Battellino Speaks

NZD: No Data Today

JPY: CSPI y/y

GBP: MPIC Member Tucker Speaks

EUR: ECB Trichet Speaks

USD: Unemployment Claims, Prelim GDP Price Index q/q