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Stumbleupon:: Australian Dollar: The AUD came under some selling pressure in Asia yesterday following a much wider than expected trade deficit during the month of May due mainly to a 5% decline in exports. With commodity prices rising and the global economy continuing to slow the recession effects on demand for Australian exports is quite clear, hence some widening was forecast however the -556 million AUD shortfall was much larger than predictions of a deficit around -125 million AUD. As a consequence the Aussie dollar drifted lower from 0.8095 to enter offshore trade around 0.8030 before European investors fled the Euro currency propping up support for the Greenback against the majors. This morning sees the local unit exchanging on its lows at critical technical support at 0.7930 following poor Euro-zone and U.S economic data with topside resistance ahead of 80 cents likely to cap any attempts at a rebound today.
- We expect a range today in the AUD/USD rate of 0.7885 to 0.7985
:: Great Britain Pound: The June Purchasing Managers index for the U.K construction industry released overnight failed to live up to expectations of a slight increase from 45.9 the previous month to drop to 44.5 triggering some early London selling on the GBP/USD. The big news overnight however was continued increases in Euro-Zone and U.S unemployment which saw investors flock to the Greenback. After dropping to test 1.6320 on two occasions overnight the GBP is exchanging this morning at 1.6370 and 2.0650 against the U.S and Australian dollars, with the GBP/AUD cross rate higher due to a larger fall in the Aussie.
- We expect a range today in the GBP/AUD rate of 2.0550 to 2.0800
:: New Zealand Dollar: After trading sideways for the majority of yesterday's Asian session the Kiwi dollar fell below what had been relatively solid intraday support at 0.6370 during the European session. Poor Euro-zone economic data and comments from the ECB dragged the Euro down as risk appetite once again deserted investors. The NZD/USD opens this morning on its lows at 0.6280 with a larger than expected increase in the U.S jobless rate adding to concerns surrounding the global economic recovery.
- We expect a range today in the NZD/USD rate of 0.6235 to 0.6325
:: Majors: The Euro took a hit in offshore trade falling from 1.4120 to below 1.4 following the ECB meeting and the release of poor European economic data. The negative news came in the form of an unexpected 0.2% drop in the Euro-zone Producer Price Index during the month of May followed by a larger than expected rise in the unemployment rate from 9.2% to a 10 year high of 9.5%. The downside move in the Euro continued following the conclusion of the meeting of the European Central Bank with interest rates remaining on hold at 1% and Trichet leaving the door open for further reductions if necessary by saying that "we did not decide today that this was the lowest level we would attain under any circumstances". In U.S employment data that followed June non-farm payrolls fell more than forecast by many economists with the -467k result catching the market by surprise. Equity markets in the region fell over 2.5% signalling repatriation of funds back into the Greenback against most majors with the notable exception being against the Japanese Yen which opens this morning down from its overnight highs around 96.85 at 95.90.
:: Data Releases:
* AUD: No Data Expected today
* NZD: No Data Expected today
* USD: 4th July Holiday
* GBP: Jun PMI Services
* EUR: May Retail Sales & Jun forecast PMI Services
* JPY: No Data Expected today
* CAD: No Data Expected today
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