Australian Dollar: The Aussie cold not hang onto its gains above 0.9750 during Friday's local session after the release of third quarter new home sales which fell 14 per cent. The Aussie hit an intraday low of 0.9740 and remained there until European markets opened. In overnight trade the unit moved as high as 0.9821 after yet another bout of greenback weakness and opens higher on Monday at 0.9850. Near-term risk for the Aussie could be to the downside if the Reserve Bank of Australia were to hold rates steady tomorrow. Similar to the lead-up to last weeks inflation data, the market appears "long" heading into the decision.

  • We expect a range today of 0.9820 – 0.9890

New Zealand Dollar: The New Zealand Dollar opens the new week against the greenback at 0.7645 with direction still largely being driven by greenback sentiment. In offshore trade on Friday, the kiwi briefly touched fresh two-year highs at 0.7650. Currency markets worldwide are bracing for this weeks 2-day meeting of the US Federal Reserve who are expected to announce a second round of quantitative easing somewhere between US$500 billion - 2 trillion. Meanwhile, the kiwi opens sharply higher against the Australian Dollar at 0.7760. The local economic calendar is very light this week until Thursdays employment data.

  • We expect a range today of 0.7625 – 0.7700

Great British Pound: The pound hit a two-week high above 1.6000 against the greenback on Friday night after a report showed UK consumer confidence unexpectedly improved last month. Earlier in the session the currency was trading around 1.5880. Research group Gfk NOP Ltd reported the confidence index rose 1 point to minus 19 in October. Propping up the pound at present is higher than expected growth data released last week and greenback weakness across the board. Meanwhile, the pound opens steady against the Australian Dollar (1.6280) and higher against the New Zealand Dollar (2.0950).

  • We expect a range today of 1.6260 – 1.6310

Majors: The greenback moved lower against a basket of currencies on Friday as economic data fuelled further speculation as to the size and scope of an expanded asset purchase program. US Federal Reserve policy makers meet for 2 days this week to discuss the so-called quantitative easing which involves buying its own treasuries as a way to keep borrowing costs down and stimulate economic growth. Inflation slowed to an annualised pace of 0.8 per cent (versus 1 per cent expected) whilst U.S. gross domestic product did not surprise coming in at 2 per cent annual rate in the third quarter. The Euros upside was limited to 1.3950 whilst the Japanese Yen hit fresh 15-year highs against the US Dollar at 80.43 as the Bank of Japan brought forward the date of its next meeting fuelling speculation it too may increase debt purchases to ignite growth.

Data releases

  • AUD: Performance of manufacturing index, Oct
  • NZD: No data today
  • JPY:  No data today
  • GBP: PMI Manufacturing, Oct
  • EUR: Euro zone PMI, Oct
  • USD: ISM Manufacturing, Oct