Greenback strength the predominant theme

Australian Dollar:

Whilst global stocks have rallied off the back of renewed investor confidence which surrounds the health of the world’s largest economy the Australian dollar by contrast has struggled over the past three days of trade weighed down by heightened rate forecasts across the United States. Having traded in a tight range of 0.8130 – 0.8172 over the past 24 hours when valued against its US Counterpart investors are now eyeing resistance at 0.8315 (July 2010 low), followed by support at 0.8107. In what’s shaping up as a quiet day ahead an empty domestic calendar should see liquidity levels remain low as we head into the Christmas break. Meanwhile this morning the Australian dollar buys 81.36 US Cents

• We expect a range today of 0.8110 – 0.8170

New Zealand Dollar:

Having traded in a relatively tight 60 basis point range when valued against its US Counterpart yesterday, it has been a far from inspiring 24 hour period for the Kiwi which has struggled to attract real money flows. Bouncing off lows of 0.7713 broader signs of continued weakness across commodity prices as well a robust growth outlook for the US have both weighed heavily on New Zealand’s dollar. With today’s trade balance number representing the final significant macro development before Christmas the consensus view is for an overall deficit of $550 million. Opening this morning only marginally weaker the Kiwi currently buys 77.29 US Cents.

• We expect a range today of 0.7700 – 0.7780

Great British Pound:

Ahead of several key economic indicators this evening (GDP, Current Account and Mortgage Approvals), the Great British Pound has struggled to advance in the face of a notably stronger Greenback. Despite UK stocks which advanced for a fifth day the Sterling traded down to a low of 1.5586 when valued against its US Counterpart opening this morning 0.3 percent lower compared to the same corresponding period yesterday at 1.5590. Whilst lower also against the Aussie (1.9164), the Sterling has managed to maintain its value versus the Kiwi (2.0170).

• We expect a range today of 1.9130 - 1.9200

Majors:

US Stocks have maintained their update trajectory overnight, notching up their biggest three day rally in three years. Whilst there have been no substantial developments overnight to upset the consensus view that the US remains on track to record modest growth next year data did show that the purchase of previously owned US homes dropped by a greater than expected amount in November. In currency developments overnight volatility levels have tumbled in what appears to be a low liquidity environment. Maintaining its strength when valued against the Japanese Yen this morning (119.979), the Euro also opens steady at a rate of 1.2221. In what’s shaping up as the final major hurdle before the Christmas break investors will be watching closely Final GDP and Durable Goods Orders from the United States this evening.

Data releases

• AUD: No data today
• NZD: Trade Balance
• JPY: Bank Holiday
• GBP: Current Account, Final GDP q/q
• EUR: French Consumer Spending m/m
• USD: Core Durable Goods Orders m/m, Final GDP q/q, New Home Sales