Daily Forex Commentary 17/8/2010

:: Australian Dollar: Poor growth data released in Japan yesterday was enough for investors to once again eschew riskier assets which saw the Australian Dollar dip towards 0.8860 early in the Asian session. A decline in local motor vehicle sales for July (-2.6 per cent) and weaker equity markets in the region also did nothing to help the Aussie's cause. The story was only marginally different offshore with the unit steadying and moving back over 0.8950 on the back of stronger gold and commodities. Gold is at a 6-week high of US$1,224.70/oz. Meanwhile, the AUD opens today at 0.8972 against its U.S. counterpart. Today's release of minutes from the Reserve Bank's August meeting will be closely watched by currency markets.

- We expect a range today in the AUD/USD rate of 0.8900 to 0.9000

:: Great Britain Pound: Pound Sterling opens marginally higher today against its U.S. counterpart at 1.5661. Greenback weakness across the board took the pound from a low of 1.5534 up to an intraday high of 1.5702 in what was otherwise a lacklustre session. The pound remains vulnerable over planned U.K budget cuts which may cool the pace of economic recovery. Meanwhile, the pound opens weaker against the Australian Dollar at 1.7420 but is stronger against the New Zealand Dollar at 2.2140.

- We expect a range today in the GBP/AUD rate of 1.7400 to 1.7470

:: New Zealand Dollar: The New Zealand Dollar opens largely unchanged against the greenback today at 0.7070. Risk aversion continues to weigh on the currency after weaker-than-expected growth data out of Japan yesterday sparked another round of selling in Asian equity markets and high-yielding currencies. The kiwi hit an intraday low of 0.6990 and was not aided by a local services sector report. Reflecting weaker sales, the BNZ-Business NZ performance of services index fell 4.6 points in July to 50.5. Meanwhile, the kiwi is weaker against the Australian Dollar and opens today at 0.7874.

- We expect a range today in the NZD/USD rate of 0.7020 to 0.7110

:: Majors: The big dollar has continued its dramatic slide against the Japanese Yen and opens today at 85.30. It touched a 15-year low last week at 84.73. Data released yesterday showed Japanese gross domestic product rose at an annualised pace of 0.4 per cent in the three months to June 30, well below economists' forecasts, fuelling safe-haven demand amid further signs the global economy is faltering. The greenback also slid against the Euro and opens today at 1.2825. In overnight trade, the 16-nation currency moved between a low of 1.2732 and a high of 1.2870. The safe-haven rally was not restricted to the Japanese Yen as the Swiss Franc also rose across the board, along with base metals. Gold is trading at a 6-week high of US$1,224.70/oz.

:: Data Releases: