Daily Commentary - 19/10/2009

:: Australian Dollar: After rallying to an intraday high above 0.9250 in Asia on Friday risk appetite waned somewhat sending the Aussie dollar back below 92 cents in offshore trade. With the Euro drifting lower on poor trade data and demand for the Greenback increasing on fears the equity rally may stall the AUD/USD reached an eventual low near 0.9120 and opens this morning exchanging around 0.9165. With no local economic data scheduled today the Aussie dollar is expected to trade within a relatively narrow range between 0.9140 and 0.9190 in Asia with Friday nights lows holding the key for further direction offshore.

- We expect a range today in the AUD/USD rate of 0.9135 to 0.9185

:: Great Britain Pound: In volatile trading conditions the Pound Sterling traded lower in early London before bouncing back from 1.6250 against the Greenback to finish the week back around 1.6350. The Pound Sterling continues to be dictated by comments and rumours surrounding the central banks intentions on the asset purchase program and whether or not it will continue. A pullback in the Aussie dollar coupled with a firmer Pound sees the GBP/AUD cross rate open this morning higher at 1.7815.

- We expect a range today in the GBP/AUD rate of 1.7775 to 1.7875

:: New Zealand Dollar: With risk sentiment turning negative on Friday demand for the Greenback resurfaced pushing the Kiwi down to a low of 0.7350. An unexpected reversal in the European Trade Balance and a lower than forecast Confidence survey out of the U.S turned financial markets on Friday as suddenly the big dollar became attractive again. This morning sees the NZD/USD open at 0.7370 ahead of September N.Z Performance of Services Index data which could weigh on the Kiwi in local trade.

- We expect a range today in the NZD/USD rate of 0.7325 to 0.7400

:: Majors: EUR/USD failed to break through resistance at 1.4965 for the second occasion in as many days subsequently dropping to a low of 1.4850 on Friday evening. The main catalyst for the move was weaker than expected Euro-zone Trade balance with exports declining a seasonally adjusted 5.8% in August compared to the previous months 4.7% increase. The University of Michigan's closely scrutinised preliminary confidence survey for October declined more than expected, falling from 73.5 to 69.4 adding to the flight back to the safety of the Greenback. The big dollar also benefited from lower equity markets rising to a high of 91.25 against the Japanese Yen.

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