:: Australian Dollar: The local market remained on tender hooks leading into yesterdays RBA rate decision with analysts seemingly split on the outcome. The Aussie traded lower heading into the announcement as investors took some profit to safeguard against a possible rate cut dipping to a low of 0.7060 in morning trade. Whilst there were reasonable arguments for both camps the central bank decided to lower the official rate by 0.25% to 3% while acknowledging Australia’s economy is contracting, with capacity utilization falling and demand for labour declining. It gave little hint however as to any future moves preferring to wait and see as it expects the current stance of monetary policy to “provide significant support to domestic demand over the period ahead”. The AUD gained confidence from the release bouncing back from a very brief dip to exchange at a high of 0.7165 in early London trade whilst remaining extremely choppy for the remainder of the offshore session. After two failed overnight attempts to break above 0.7165 the local unit opens this morning right on 71 cents ahead of today’s Housing Finance figures weighed down by a second consecutive negative session Wall Street.

- We expect a range today in the AUD/USD rate of 0.7020 to 0.7160

:: Great Britain Pound: The Pound Sterling held up well during early London trade receiving a boost from better than expected U.K economic data. Despite Industrial Production and manufacturing production both declining in February the falls were not as bad as what analysts had been anticipating and as such the GBP/USD edged up to a high of 1.4745 during early offshore exchange. A spike in demand for the Greenback saw a brief selloff back to 1.4580 but the move was shot lived as the Pound recovered to open this morning back at 1.4730 whilst the GBP/AUD cross rate opens higher at 2.0750. Meanwhile, the pound opens at 2.5550 against its New Zealand counterpart.

- We expect a range today in the GBP/AUD rate of 2.0500 to 2.0840

:: New Zealand Dollar: The New Zealand Dollar has retreated from its recent three-month high of 0.5975 to open on Wednesday morning at 0.5750 against its US counterpart. Pushing the local unit lower yesterday was a grim report of Business Opinion from the NZ Institute of Economic Research which had most investors increasing their expectations of a Reserve Bank of NZ rate cut later this month. Also weighing on the kiwi currency and its fellow high-yielders was a second consecutive negative session on Wall Street. The kiwi also slid against the Australian Dollar and is currently trading at 0.8075.

- We expect a range today in the NZD/USD rate of 0.5780 to 0.5790

:: Majors: The Euro plummeted in early offshore trade after a bigger than expected drop in fourth quarter economic growth in the European region. Q4 GDP contracted by 1.6% in the quarter taking the annual decline to 1.5%, the largest fall since records began in 1995, sending EUR/USD down from 1.3380 to an overnight low of 1.3225. Adding to the move lower was comments by ECB member Provopoulos who suggested the bank may cut interest rates to below 1% should conditions continue to worsen (as they have been) stating that “I do not see one percent as a threshold for the ECB” and “I do not exclude that the ECB could go down further from this level if the economic environment deteriorates further”. In other news yesterdays Bank of Japan meeting concluded with the central bank leaving interest rates on hold at 0.1% as expected however they did announce that they will “expand the range of eligible collateral for loans” which strengthened the Yen a touch in local trade. Early Europe c ontinued the theme with USD/JPY sliding back below 100 before a slight bounce back in EUR/JPY late in the session sees the big dollar open at 100.35 in exchange with the Yen.

:: Data Releases:

• AUD: Unemployment Rate, March

• CAD: Trade Balance, Feb; Unemployment Rate, March

• EUR: ECB Monthly Report

• GBP: Bank of England interest rate decision

• JPY: Machine orders, February

• NZD: NZ House Prices, Q4

• USD: Trade Balance, February

:: Note: The above exchange rates are based on interbank rates. If you are considering a transfer then please login, register or call us for a live dealing rate.

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