Daily Commentary - 29/09/2009

:: Australian Dollar: The Australian Dollar opens higher against the greenback on Tuesday at 0.8720. During the local session, the Aussie came under selling pressure and moved briefly beneath US86 cents as local equities opened the week in negative territory. Interest rates were again in the spotlight with RBA Governor Glenn Stevens delivering a testimony to a Senate Committee. Investors are pricing in a 45 per cent chance of a 25-basis-point rate hike in November, and fully pricing in the first rate rise in December. In the speech Mr Stevens noted that the Bank has already signalled that interest rates can be expected, at some point, to move off their current unusually low levels. The RBA monetary policy board next meets on October 6, though very few in the market expect it to lift rates at that meeting.

- We expect a range today in the AUD/USD rate of 0.8660 to 0.8755

:: Great Britain Pound: Pound Sterling remains under pressure and opens on Tuesday in Sydney at 1.5877, down from 1.5967 this time yesterday. The pound hit a four-month low against the greenback of 1.5769 during overnight trade despite a 1.6 per cent rally on local equities and an increase in U.K. property prices. U.K. house prices increased by 0.2 per cent in September according to Hometrack Ltd - a London-based property research company. Meanwhile, the pound is once again sharply lower against both the Australian Dollar (1.8200) and the New Zealand Dollar (2.2159).

- We expect a range today in the GBP/AUD rate of 1.8100 to 1.8320

:: New Zealand Dollar: The New Zealand Dollar opens little-changed on Tuesday at 0.7150. The kiwi is pausing for breath for the time being after a spectacular 45 per cent rally against the greenback in the past six months. However, there is enough domestic economic data due for release this week to provide further support to the local unit. Today sees August building approvals which are expected to remain on an upward trend whilst tomorrow marks the release of this month's NBNZ survey of business confidence. The kiwi also remains strong on several of the major cross-rates, most notably against the British Pound (0.4500).

- We expect a range today in the NZD/USD rate of 0.7120 to 0.7210

:: Majors: The greenback was mixed overnight and hit an eight-month low against the Japanese Yen of 88.21 on speculation the Japanese government will not intervene in currency markets and allow the currency to appreciate. Japan's Finance Minister Hirohisa Fujii was recently quoted as saying the Japanese currency's moves aren't excessive. The greenback re-captured most of the early losses to open on Tuesday at 89.50. Meanwhile, against the Euro, the big dollar appreciated after European Central Bank President Jean-Claude Trichet said it is extremely important to have a strong greenback. The Euro opens at 1.4614, down from its recent one-year high on September 23 of 1.4844.

:: Data Releases: