Daily Forecast - 25/1/2010

:: Australian Dollar: The Aussie dollar dipped below 90 cents during Friday's Asian session following a larger than expected 4.3% fall in the Australian Q4 import price index which, despite a smaller forecast drop in the Export price index, indicates a more sluggish relative economic performance with the rest of the world. Demand picked up again in afternoon trade with offshore markets taking the AUD/USD back towards the 91 cent handle after some relatively upbeat European economic data. With U.S equities once again falling, this time over 2% the high yielding Aussie retested 90 cents before bouncing back late in the session to open this morning in the middle of the range around 0.9050 ahead of today's fourth quarter Australian Producer Price data.

- We expect a range today in the AUD/USD rate of 0.8980 to 0.9100

:: Great Britain Pound: An extremely disappointing UK consumer spending report saw the Cable drop around 200 points from Friday's offshore high of 1.6280 to an eventual low around 1.6080. December Retail Sales increased a modest 0.3% which despite being an improvement from Novembers -0.3% result was well below economist forecasts for a 1.1% increase. The GBP finished the week exchanging at 1.6125 against the Greenback and on its lows around 1.7800 against the Aussie dollar.

- We expect a range today in the GBP/AUD rate of 1.7750 to 1.7900

:: New Zealand Dollar: The Kiwi formed what is known by chartists as a double bottom in intraday Asian trade on Friday twice bouncing from support below 71 cents entering offshore exchange at 0.7135 against the Greenback. Upside momentum during European trade saw it peak at 0.7175 before risk aversion resurfaced, thanks mainly to large drop in U.S equity markets which remain nervous about the proposal to ban speculative trading by investment houses. This week's main highlight in N.Z will be Thursdays RBNZ interest rate decision and the accompanying rhetoric which is sure to move the markets.

- We expect a range today in the NZD/USD rate of 0.7075 to 0.7175

:: Majors: The Euro received a boost during Friday's offshore session following much better than expected Euro-zone Industrial New orders with the year to date result improving from -14.4% to -1.5% against forecasts of an improvement to -7%. As a result EUR/USD held on to support at 1.4110 to trade as high at 1.4165 however doubts about the validity of Greece's fiscal data saw ECB President Trichet call for Euro area countries to do everything they can to put their national finances in order. Banking stocks around the globe continued to come under selling pressure following last week's call by U.S president Obama to outlaw speculative trading by investment banks. With no U.S economic data scheduled for release and North American equity markets fell over 2% during Friday's session sparking a jump in the Greenback however the move was relatively short lived as it finished the week at 1.4155 and 90.05 against the Euro and Yen respectively.

:: Data Releases: