Daily Forecast - 12/11/09

:: Australian Dollar: The Australian Dollar opens steady against the greenback at 0.9280. The Aussie spent most of the domestic trading the ranges between a low of 0.9275 and a high just above US93 cents. Local lending data had virtually zero effect on the unit. Chinese economic data is closely watched these days with both industrial production (+16.1 per cent) and retails sales (+16.2 per cent) for October exceeding expectations and bolstering forecasts for a third-quarter growth rate above 10 per cent for the first time in more than a year. Domestically, if unemployment data comes in better than expected today, the local currency may test new highs for 2010. The market is expecting a loss of 10,000 jobs last month for an unemployment rate of 5.8 per cent.

- We expect a range today in the AUD/USD rate of 0.9245 to 0.9360

:: Great Britain Pound: Pound Sterling (1.6540) fell sharply overnight after Bank of England Governor Mr Mervyn King said a weaker currency should lead to a recovery in economic activity. The market viewed the comments as a signal the bank may not yet have completed its quantitative easing program. The pound was higher (1.6797) earlier in the session after data revealed that jobless claims in October climbed at their slowest rate in over 18 months. Meanwhile, the pound is weaker against both the Australian Dollar (1.7800) and the New Zealand Dollar (2.2385).

- We expect a range today in the GBP/AUD rate of 1.7720 to 1.7900

:: New Zealand Dollar: The New Zealand Dollar opens lower against the greenback at 0.7385. In the absence of any local economic data, market participants remained largely on the sidelines until the release of Chinese industrial production and retail sales numbers late in the session. Both of the Chinese releases exceeded expectations and point towards solid third quarter growth which helped to underpin both the Australian and New Zealand currencies. The kiwi moved from an intraday low of 0.7375 to a high of 0.7444. With New York markets closed overnight, offshore action was fairly subdued by recent standards.

- We expect a range today in the NZD/USD rate of 0.7340 to 0.7460

:: Majors: The United States Dollar is little-changed against both its European (1.4970) and Japanese (89.80) counterparts after a session of high-yield demand as stocks and commodities rallied. There are several factors keeping the greenback under pressure at the moment including the likelihood that the U.S. Federal reserve will keep borrowing costs low and strong economic out of China and Japan. Chinese industrial production and retail sales both surged in October, whilst Japanese machinery orders increased 10.5 per cent in September from the previous month. Meanwhile, gold hit fresh record highs overnight and is currently trading at US$1,117/oz.

:: Data Releases: