Australian Dollar: Unlike our cricketers who have wilted in the Adelaide heat, the Aussie dollar rallied sharply on Friday night and opens the new week at 0.9900. It was business as usual during Friday's domestic session, trading between 0.9738 and a local high of 0.9773 after data revealed the services sector weakened for the ninth time this year to 46.2 in November as a series of rate hikes take effect. A figure of 50 separates contraction from expansion. Offshore, the unit climbed steadily throughout most of the session to a two-week high just above US99 cents on the back of a sharply stronger Euro as the European Central Bank extended liquidity measures in order to curb the spread of the sovereign debt crisis. The Aussie remains strong on a trade-weighted basis and opens at 0.7380 against the Euro.
- We expect a range today of 0.9880 – 0.9960
New Zealand Dollar: The New Zealand Dollar opens sharply higher against its US counterpart on Monday at 0.7650. During Fridays local session, the unit marked time in a subdued 20-pip range before following the Australian Dollar and Euro steadily higher throughout the offshore session. The kiwi hit a fresh two-week high of 0.7667 on Friday night as the European Central Bank extended liquidity measures in order to curb the spread of the sovereign debt crisis. Risk appetite and greenback weakness have gathered momentum over the last two trading sessions. High interest rates and stronger commodity prices are also helping to underpin the kiwi. Meanwhile, the kiwi opens at 0.7710 against the Australian Dollar.
- We expect a range today of 0.7620 – 0.7690
Great British Pound: Pound Sterling was the beneficiary of Fridays risk rally and greenback weakness across the board and opens today at 1.5770. The currency rallied from a low of 1.5580 to a high of 1.5787 after a report in the United States showed employers added fewer jobs than forecast. Also assisting the pound was another positive reading for the services PMI which came in at 53 in November - very close to a four-month high. Meanwhile, the pound is lower against both the Australian Dollar (1.5890) and the New Zealand Dollar (2.0580).
- We expect a range today of 1.5800 – 1.5910
Majors: The US Dollar (82.60) dropped to a three-week low against the Japanese Yen on Friday night at 82.51 after U.S. jobs data came in worse than expected. Payrolls increased by just 39,000 and the unemployment rate unexpectedly rose to 9.8 per cent in November (the highest since April) from 9.6 per cent in October. The data underlined the US Federal Reserves decision last month to pump further liquidity into the economy. Meanwhile, the Euro rose to a 10-day high against the greenback at 1.3416 as risk appetite returned and the European Central Bank (ECB) extended liquidity measures in order to curb the spread of the sovereign debt crisis. There was speculation the ECB purchased Irish, Portuguese and Greek government debt over the past two days. ECB President Jean-Claude Trichet said the central bank will keep offering banks funds at fixed rates for 7 days, one month and three months through the first quarter.
Data releases
- AUD: AiG Performance of Construction Index, Nov
- NZD: No data today
- JPY: No data today
- GBP: No data today
- EUR: EZ Investor Confidence
- USD: No data today
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