Daily Forecast - 27/1/2010

:: Australian Dollar: The Australian Dollar opens lower on Wednesday at 0.8990. The unit could not match the patriotic fervour that gripped the nation yesterday dipping beneath US90 cents during late afternoon Asian trade. After a brief pre-lunch bout of flag-waving above 0.9050, the Aussie slid as China's stocks fell for a third straight session. Traders remain concerned the Chinese government will tighten credit to cool the economy. With local markets closed, the Aussie fell to an intraday low of 0.8980 during the Asian time zone. The negative sentiment towards high-yielding currencies continued in offshore trade pushing the unit down to a 24-hour low of 0.8936.

- We expect a range today in the AUD/USD rate of 0.8920 to 0.9030

:: Great Britain Pound: Pound Sterling (1.6145) opens sharply lower today against the U.S. Dollar after fourth quarter GDP came in less than expected. The economy grew by just 0.1 per cent in the final 3 months of 2009 dragging the pound down to an overnight low of 1.6092. Weighing on the pound is speculation the Bank of England may extend its asset-purchase program when it next meets on February 4. Meanwhile, the pound opens marginally lower against both the Australian Dollar (1.7930) and the New Zealand Dollar (2.2780).

- We expect a range today in the GBP/AUD rate of 1.7900 to 1.8040

:: New Zealand Dollar: The New Zealand Dollar opens lower today against the greenback at 0.7075. Thin trading conditions on Tuesday due to a national holiday across the Tasman exaggerated moves in the currency pushing it beneath US71 cents during late Asian trade on Chinese credit-tightening concerns. During the offshore session the kiwi moved between a high of 0.7100 and a low of 0.7020 where profit-takers emerged pushing the currency steadily back towards this morning's opening levels.

- We expect a range today in the NZD/USD rate of 0.7000 to 0.7100

:: Majors: The big dollar and the Japanese Yen climbed against several major currencies overnight as demand for high-yielding assets diminished. Risk aversion swept currency markets yesterday on speculation China will take further steps to cool its economy. The dollar rallied to an overnight high of 1.4041 against the Euro after an ECB board member said policy-makers are seriously concerned about widening budget deficits in the region. Meanwhile, the Yen's three-week rally against the greenback (89.64) continued yesterday after the Bank of Japan held interest rates at 0.1 per cent.

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