OzForex Daily Commentary - 1 Sept 2009

:: Australian Dollar: The Australian Dollar opens stronger on Tuesday at 0.8435 after shrugging off worse-than-expected local data yesterday where gross operating profits fell 7.8 per cent in the June quarter and business inventories shrank 3.4 per cent. The local unit fell sharply late in the day to a low of 0.8338 as Chinese equities plunged almost 7 per cent on fears the Chinese Government is trying to moderate economic growth by tightening credit conditions. Meanwhile, the Reserve Bank of Australia meets today and interest rates are widely tipped to remain unchanged at a 49-year low of 3 per cent.

- We expect a range today in the AUD/USD rate of 0.8360 to 0.8460

:: Great Britain Pound: Pound Sterling opens flat today at 1.6285 after UK house prices rose in August for the first time in 2 years. According to the London-based property research company Hometrack Ltd, the average cost of a home in England gained 0.1 per cent adding to signs that Britain is slowly emerging from the deepest recession in sixty years. In overnight trade the pound moved between a low of 1.6182 and a high of 1.6329. Meanwhile, the pound continues to lose ground against both the Australian Dollar (1.9280) and the New Zealand Dollar (2.3730).

- We expect a range today in the GBP/AUD rate of 1.9150 to 1.9380

:: New Zealand Dollar: The New Zealand Dollar opens steady today at 0.6850 after comments on Monday from Reserve Bank of New Zealand governor Mr Alan Bollard. Amid the backdrop of a 38 per cent increase in the value of the kiwi during the past six months, Mr Bollard noted that we haven't had the exchange rate picture that we would have liked to have had to aid a recovery. There is no major economic data due for release in New Zealand this week which leaves the kiwi hostage to movements in the greenback and local market traders who are not necessarily right according to Mr Bollard.

- We expect a range today in the NZD/USD rate of 0.6790 to 0.6880

:: Majors: The Japanese Yen is stronger on Tuesday after another bout of risk aversion as declines in global stocks from China to the United States encouraged investors to sell high-yielding assets and head for safety. The Euro opens higher against the greenback at 1.4328 whilst USD/JPY opens lower at 93.00 despite a pick-up in US August business activity. Chicago's Institute for Supply Management reported that its business barometer increased to 50 from 43.4 in July. However, it was the 6.7 per cent plunge in China's Shanghai composite index which had traders shunning risk and heading for the relative safety of the Japanese yen. Meanwhile, the Canadian Dollar (1.0930) lost ground as crude oil, the nation's main export declined 3.9 per cent to US$69.93 per barrel.

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