Wednesday, October 24, 2012

Safe Haven Currency for Picks: AUD/USD: 1.0220 – 1.0300, NZD/USD: 0.8080 – 0.8160, GBP/AUD: 1.5500 – 1.5580

Safe haven currency for picks, AUD/USD, NZD/USD and GBP/AUD, here is the details:
AUD/USD: 1.0220 – 1.0300
NZD/USD: 0.8080 – 0.8160
GBP/AUD: 1.5500 – 1.5580
For complete analysis:
Australian Dollar:
In what can only be described as an uneventful day across Asian markets yesterday the performance of the Australian dollar was far from inspiring. Bouncing 20 basis points either side of opening levels close to 1.0320, the lacklustre mood across markets well and truly set in as European and US markets entered the frame. Given the lack of macro-economic releases overnight disappointing earnings across the US corporate sector accounted for the large losses witnessed on equity markets as the Australian dollar fell in line with the sell-off. Reaching overnight lows of 1.0235 against the Greenback the 1.03 handle has once again become a well-worn and congested area. On the outlook today CPI figures, should they come in below expectation are likely to further weaken the Australian dollar as bets of further rate cuts increase. The Australian dollar is currently swapping hands at a rate of 1.0261

New Zealand Dollar:
Markets remained in a risk-off mood yesterday as Global Equities encountered the largest daily fall since June this year. In a continuation of what has been a very poor earnings season for some large US Companies the New Zealand dollar traded down to a low of 0.8100 against its US Counterpart. Whilst there were also some extensive credit downgrades by ratings agency Moody in five of Spain's most important regions all in all investors have shed anything deemed riskier in nature over the past 24 hours as witnessed by increased flows into the US Currency. With the US Federal Reserve starting its two day meeting this evening along with key data releases out of Europe volatilities across currency markets are expected to continue. Meanwhile this morning the New Zealand dollar opens 60 basis points stronger currently buying 81.19 US Cents.
 
Great British Pound:
Investors remained frustrated at the lack of quality in corporate earnings overnight as UK Stocks tumbled the most in almost a month. With third quarter GDP figures not due for release until overnight Thursday investors continue to take direction from broader equity markets which have plagued risk sentiment. Dropping below the 1.60 handle the Great British Pound slumped to an overnight low of 1.5912 against its US Counterpart as the Sterling opens noticeably weaker this morning at 1.5950. Despite its poor performance against the Greenback there was some notable strength when compared to the Aussie (1.5542) and the Kiwi (1.9641) which both open well higher.
Global Stocks and Majors:
Global stocks slid more than 1 percent overnight as the Euro also followed suite dropping to its lowest level against its US Counterpart since October 16. After starting the day at 1.3057 lows of 1.2950 were briefly witnessed as news from Spain once again hogged the spotlight. According to Spain's Central Bank the euro-zones fourth largest economy contracted in the third quarter as Ratings Agency Moody downgraded the credit rating of five Spanish regions. With the market now anticipating a possible international bailout request by Spain, levels above the 1.30 handle appear a stretch in the short-term in the absence of the ESM stepping in to provide adequate debt relief. Meanwhile in the US poor corporate earnings provided the catalyst for a general move away from riskier assets. Whilst the Greenback weakened slightly against the Japanese Yen (79.833) a two day Federal Reserve meeting due to commence this evening combined with important Manufacturing and Services figures due out from across Europe are likely to restore focus back onto the fundamentals.   
Source: ozforex
Data releases
AUD: CPI q/q
NZD: No Data Today
JPY:  No Data Today
GBP:CBI Industrial Order Expectations
EUR: ECB President Draghi Speaks, French Flash Manufacturing PMI, German Flash Manufacturing PMI, French Flash Services PMI, German Flash Services PMI, German 10-yr Bond Auction
USD: New Home Sales, FOMC Statement, Federal Funds Rate