ClearFX Daily Commentary - 20/06/2011

Australian Dollar: The Australian Dollar staged a rally back through the 1.0600 level after a lacklustre onshore session on Friday. After spending the day trading between 1.5000 and 1.0570 it broke from the lower end of this range and gained over a cent to highs near 1.0625 during European hours. Spurring demand for the Aussie and other riskier assets was the signalling German Chancellor Merkel may be willing to work with the ECB on coming to a resolution for the Greek situation. Turning back to the domestic environment however, we see the Aussie slip back below $1.06 this morning to 1.0595 as it appears caution will remain with investors ahead of the RBA minutes release tomorrow. Key points to watch for is an indication as to the expected timeline of the next interest rates increase; anything past August could see the Aussie come under further pressure.

We expect a range today of 1.0530 – 1.0650

New Zealand Dollar: The Kiwi rallied along with other higher-yielding counterparts against the Greenback on Friday as concerns start to ease over the Greek debt situation. Pushing from 0.8020 as the session moved offshore to Europe, highs near 0.8130 were achieved before a natural correction sees the currency pair back at 0.8100 this morning. Manufacturing sales figures are due locally this morning, however the general tone of the New Zealand Dollar is still likely to be swayed by international events. Against the Australian Dollar the Kiwi is trading higher and buys 0.7655 cents this Monday morning.

We expect a range today of 0.8070 – 0.8150

Great British Pound: Sterling was granted a reprieve on Friday and rose from recent lows below 1.6100 as general risk sentiment tied to the Greece situation helped lift riskier assets. Gaining a full cent, the Pound reached highs around 1.6190 and finished the week consolidating around the 1.6150/90 range. Support provided by the Eurozone looks precarious however as the UK’s economic recovery continues to falter; economic data has continued to be weak and investors are displaying caution ahead of the Bank of England’s MPC meeting minutes on Wednesday. This morning we have Cable trading in range at 1.6165 and the Pound is at 1.5250 against the Aussie and 1.9920 against the Kiwi.

We expect a range today of 1.5190 – 1.5300

Majors: The Euro has recovered from its 3 week lows below 1.4100 on Friday as the stand-off between Germany and the European Central Bank may be seeing the first hint of a white flag. German Chancellor Angela Merkel said on Friday she would work with the ECB on a debt plan for Greece, and retreated somewhat from earlier demands that bondholders should shoulder a “substantial” share of a Greek bailout. The shared currency traded up to 1.4330 by close of markets and investors will continue to watch closely as the meeting of Eurozone finance ministers is set to commence today in Luxembourg. Though they are expected to approve the latest instalment of the Greek bailout, the Euro looks to remain volatile until an agreement is reached, opening this morning at 1.4280. Across the globe the Greenback remains under pressure as the Fed’s monetary policy continues to promote a weak dollar and fundamental data in the form of weaker than expected Consumer sentiment added to the pressure. The big Dollar slipped against most of its major counterparts and against the Japanese Yen it almost looked to break through 80.00, opening at 80.10 this morning.

Data releases

AUD: No data due for release

NZD: Manufacturing Sales q/q

JPY: Trade Balance

GBP: No data due for release

EUR: German PPI m/m; Current Account

USD: No data due for release