Daily Forecast - 22/2/2010

:: Australian Dollar: The Australian Dollar opens on Monday at 0.8995 after a surprise rate raise in the United States last Friday (local time) sent the greenback soaring against several major currencies. The Aussie lost a cent in quick fashion trading as low as 0.8877 after the U.S. Federal Reserve hiked the discount rate by 25 basis points to 0.75 per cent. However, the local unit recaptured most its losses throughout the offshore session climbing to 0.8988 after U.S. inflation data for January was tamer than economist's forecasts, increasing 0.2 per cent for a fifth straight month.

- We expect a range today in the AUD/USD rate of 0.8960 to 0.9040

:: Great Britain Pound: Pound Sterling opens sharply lower on Monday at 1.5470 after weak local economic data and a surprise 25 basis point rate hike in the United States. Sterling hit a nine-month low on Friday at 1.5342 after British retail sales fell 1.2 per cent in January, more than twice as much?as economists forecast. Also putting the pound under pressure was last weeks Bank of England downward revision of economic growth. Meanwhile, the pound opens lower against both the Australian Dollar (1.7180) and the New Zealand dollar (2.2080).

- We expect a range today in the GBP/AUD rate of 1.7100 to 1.7260

:: New Zealand Dollar: The New Zealand Dollar opens today at 0.6995 and spent most of the previous session beneath US70 cents after the Federal Reserve hiked the discount rate by 25 basis points to 0.75 per cent?- the first rise in three years. The move surprised market participants and sent the greenback higher against several major currencies. The kiwi was well supported however down at 0.6930 and bounced twice from this level during offshore trade. Meanwhile, the kiwi remains weak against its Australian counterpart and opens today at 0.7770.

- We expect a range today in the NZD/USD rate of 0.6960 to 0.7035

:: Majors: The greenback strengthened against both the Japanese Yen (91.42) and the Euro (1.3620) after the U.S.?discount rate was raised by 25 basis points to 0.75 per cent which had the market speculating as to when the Federal Reserve would begin to withdraw monetary stimulus. The Euro hit a nine-month low of 1.5342 soon after the surprise rate announcement, the first such increase in three years, but recaptured some of the losses during the New York session. A Federal Reserve President in New York Mr William Dudley said the rate increase was a small technical change that doesnt signal a shift in monetary policy. In economic news, U.S. inflation increased by a less-than-expected 0.2 per cent in January. Meanwhile, the greenback hit a 5-week high against the Japanese Yen on Friday at 92.13.?

:: Data Releases: