ClearFX Daily Commentary - 17/06/2011

Australian Dollar: The Australian Dollar remains under pressure and is trading cautiously as investors wait to see where the Greek dilemma will lead. After falling close to psychological support levels at 1.0500 late in the local session, further risk aversion saw a three week low of 1.0480 in European trade. In what has been a light week on the economic calendar, it seems the Aussie is likely to ride risk sentiment through to close of markets. Climbing back to 1.0560, the Aussie found some support after US economic data eased market concerns for the country’s economic recovery. Opening at this level this morning it, resistance waits just above at 1.0580 and unless we see some positive signs from offshore the recent 1.0480 – 1.0580 range is likely to continue.

We expect a range today of 1.0460 – 1.0590

New Zealand Dollar: Following suit with its fellow high-yielders the New Zealand Dollar has fallen to lows below 80 cents overnight. As uncertainty in Greece keeps the market heavy the Kiwi has consolidated in a one cent range, hitting lows near 0.7970 during European hours. As some better than expected US data helped lift demand for riskier assets, it rallied back and after a slight stall we open this morning at 0.8060. With no expected releases locally today we expect the New Zealand Dollar to derive its value from general risk sentiment and thus investors will be watching offshore developments through till the close of markets. The Aussie Kiwi cross is relatively unchanged at 1.3100.

We expect a range today of 0.7980 – 0.8100

Great British Pound: As risk aversion dominated the Asian afternoon yesterday Sterling fell back from intraday highs near 1.6220, consolidating initially around 1.6150. However, a 1.4% drop in Retail Sales for May placed further pressure on the British Pound ; with markets only pricing in a 0.5% decline. The Pound then continued its fall to a low of 1.6080 before some better than expected US data created some demand for riskier assets. Pushing back to 1.6160, we open here this morning with US Consumer Sentiment the only key even remaining for the week. Sterling remains unchanged against its antipodean counterparts at 1.5300 against the Aussie and 2.0050 against the Kiwi.

We expect a range today of 1.5200 – 1.5380

Majors: The Greek debt crisis is dominating trade in the majors and as views and opinions swing one way or the other, so do the currencies. The Euro dropped to three week lows below 1.4080 during European trade as concerns shrouded the market that Greek authorities will fail to agree on austerity measures. These austerity measures are pivotal in reducing the country’s debt and ensuring a long term solution in so the problems do not resurface after the bailout package runs dry. Soft inflation data also weighed on the shared currency as the best argument for an interest rates rise took a small hit. Moving into North American trade, a disappointing Philly Fed Manufacturing Index failed to spur risk aversion as it was accompanied by better than expected Unemployment Claims, Building Permits an Current Account balance. The greenback gave back some of its earlier gains against the riskier currencies and the Euro recovered to start today at 1.4200. A brief rally against the Japanese Yen, post data, was soon erased and as Greece remains in the forefront of investors’ minds the Yen stays strong at 80.60.

Data releases

AUD: No data due for release

NZD: No data due for release

JPY: Monetary Policy Meeting Minutes

GBP: No data due for release

EUR: Trade Balance; Italian Trade Balance

USD: Prelim UoM Consumer Sentiment; Prelim UoM Inflation Expectations