Daily Forecast - 25/11/2009

:: Australian Dollar: The Australian Dollar opens lower today against the greenback at 0.9202. The risk appetite that buoyed the Aussie on Monday night evaporated yesterday after news emerged from China that it's banking regulator issued a stern warning to banks regarding strict adherence to capital requirements or face sanctions. The local unit shed 50 points and hit a low of US92 cents mid-morning on fears the recent lending binge in China could come unstuck and leave banks with an increase in non-performing loans. The sell-off continued when Europe opened taking the currency down to an overnight low of 0.9130. Profit-takers emerged and the Aussie steadily climbed back to US92 cents during the New York session

- We expect a range today in the AUD/USD rate of 0.9130 to 0.9250

:: Great Britain Pound: Pound Sterling opens lower against the greenback today at 1.6585 after Bank of England Governor Mervyn King said the U.K. economy still faces profound challenges and that consumer spending is now markedly lower than it was in the first half of 2008. The comments weighed on the pound which hit an overnight low of 1.6496 as it leaves the door open for further quantitative easing. Meanwhile, the pound is steady against the Australian Dollar at 1.8000 and higher against the New Zealand currency at 2.2840.

- We expect a range today in the GBP/AUD rate of 1.7900 to 1.8100

:: New Zealand Dollar: The New Zealand Dollar opens lower today at 0.7255. The kiwi's fall commenced during local trade on Tuesday despite a forecast rise in inflation expectations by the Reserve Bank of New Zealand in its quarterly survey. The unit spent most of the local session in a narrow range between 0.7270 and 0.7300 and was underpinned by a rebound in local equities and another surge in the price of gold. During overnight action, the kiwi resumed its slide hitting a low of 0.7219 during early Europe. There is plenty of support around the US72 cent mark.

- We expect a range today in the NZD/USD rate of 0.7180 to 0.7290

:: Majors: The Euro rose early in the session to a high of 1.4987 against the greenback after the release of German business confidence which increased to a 15-month high in November to 93.9 from 92 in October. Resistance emerged once again around the 1.5000 level after a US consumer confidence report showed an unexpected increase in November. Also released overnight were the minutes from the last Federal Reserve meeting in early November in which officials remained confident that the economic recovery is sustainable, even if employment did not start to pick in the short term. Members also made mention that very low short-term interest rates, including the possibility that such a policy stance could lead to excessive risk-taking in financial markets or an unanchoring of inflation expectations. Meanwhile, the greenback slumped to a one-month low against the Japanese Yen at 88.34 after third-quarter GDP in the United States expanded at 2.8 per cent annual pace, slower than previous estimates.

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