Forex Market Commentary - 10/8/09

Australian Dollar: The Aussie dollar rallied momentarily following Friday's release of the RBA's quarterly statement on Monetary Policy spiking from 0.8395 to an intraday high around 0.8420. The move was short lived however as investors had been well and truly expecting a hawkish statement given recent comments from the central bank following its decision to keep rates on hold at 3% earlier in the week. The local unit headed into offshore trade at 0.8380 with all eyes firmly planted on the U.S employment report. Non-Farm Payrolls came in much better than expected sparking a wild flurry of trade on investment markets that saw the AUD/USD jump above 84 cents only to trade back down to finish the week at 0.8355. This morning has seen the Aussie dollar continue to drift lower in early trade as demand for the Greenback continues to permeate.

- We expect a range today in the AUD/USD rate of 0.8280 to 0.8380

Great Britain Pound: The Pound Sterling began to drift lower in early London trade following the release of some soft U.K July PPI input data, dipping to 1.6715 against the Greenback in early exchanges. The much anticipated U.S payroll data sent the market into frenzy with GBP/USD initially rallying only to fall back to open this morning at 1.6670. Meanwhile the GBP/AUD cross rate is exchanging at 1.9980 after having retested 1.9880 on several occasions during Friday's offshore session.

- We expect a range today in the GBP/AUD rate of 1.9880 to 2.0050

New Zealand Dollar: The Kiwi traded sideways for the majority of Friday's Asian and European session's exchanging in a tight range between 1.6700 and 1.6725. With the U.S unemployment rate dropping from 9.5% to 9.4% and the non-farm sectors losing a less than forecast 247k jobs during the month of June the NZD jumped to a high above 68 cents before crashing back to earth as investors flocked back to the Greenback. This morning sees the NZD gapping lower on the open to exchange at 0.6690 against the Greenback whilst against the Aussie dollar the cross trades at 1.2460.

- We expect a range today in the NZD/USD rate of 0.6650 to 0.6730

Majors: Neither a larger than expected German current account surplus nor a greater than forecast fall in German Industrial Production managed to shake the Euro out of its 1.4340 to 1.4375 range during Friday's London trading session. Currency markets stood still in anticipation of the U.S employment report with economists predicting job losses of around 330k in the non-farming sectors during the month of July. With the payroll data indicating a loss of 247k jobs, much less than anticipated, investors bought the Greenback against the Euro as EUR/USD dropped dramatically towards 1.4150. The big dollar also rallied hard against the Japanese Yen, jumping from 95.30 to an eventual high of 97.75. In recent times positive U.S data has seen traders flock to riskier assets, selling Greenback for Euro and other higher yielding currencies. The move into the U.S dollar left many analysts puzzled as it signalled a shift back to more fundamental trading however the basis for the move appears to be founded on a belief that the U.S may in fact beat many other nations, in particular Europe, out of recession. The market will be looking for more cues this week from the U.S FOMC and a raft of economic data in the form of Retail Sales and Consumer Prices to name but a few of the key scheduled releases ahead.

Data Releases: