Forex Daily Commentary - 08/07/2009

:: Australian Dollar: The Australian Dollar opens lower on Wednesday at 0.7886. The local unit moved towards US80 cents late on Tuesday after the Reserve Bank of Australia (RBA) left rates on hold at 3.00 per cent in a decision that was more predictable than an NRL off-field incident. The RBA's accompanying statement was more upbeat about China which gave a lift to our commodity-driven currency. After hitting an overnight high of 0.8037 during the European session, the Aussie declined steadily as US equities plummeted to a 2-month low and risk-aversion returned.

- We expect a range today in the AUD/USD rate of 0.7850 to 0.7945

:: Great Britain Pound: Pound Sterling opens lower for a fourth day in a row at 1.6134 after the British Chambers of Commerce recommended that the Bank of England extend its quantitative easing program (i.e. asset purchases) beyond GBP150bio in a further attempt to revive the economy. Traders took the view that printing money is likely to be negative for the Sterling in the long-term. The pound also weakened after a report released on Tuesday revealed that factory production fell in May for the first time in three months. Meanwhile, the pound is steady against the Aussie (2.0440) ahead of the first test in Cardiff and steady against the Kiwi at 2.5650.

- We expect a range today in the GBP/AUD rate of 2.0220 to 2.0500

:: New Zealand Dollar: The New Zealand Dollar opens lower today at 0.6280 despite a significant improvement in local business confidence. According to NZIER's quarterly survey, business confidence rebounded in the June quarter with only 25 per cent of firms expecting conditions to deteriorate, compared to 65 per cent the previous quarter. The kiwi hit a high of 0.6392 but declined steadily during the New York session after US equities plummeted to a 2-month low and risk-aversion returned.

- We expect a range today in the NZD/USD rate of 0.6220 to 0.6345

:: Majors: The Japanese Yen strengthened to a 6-week high of 94.69 against the greenback overnight on speculation U.S. corporate earnings will drop enticing Japanese investors to sell overseas assets and bring funds back home. Also undermining the big dollar on Tuesday were continued doubts about the pace of economic recovery and a subsequent 2 per cent fall in the Dow Jones to a 2-month low. Meanwhile, the Euro fell from an intra-day high of 1.4049 down to 1.3902 despite German factory orders increasing 4.4 per cent in May - the biggest gain since 2007.

:: Data Releases: