Australian Dollar
The Reserve Bank of Australia surprised a few investors yesterday by keeping the official cash rate unchanged at 3.25 percent. Having cut 1.5 percent from the underlying rate over the past 12 months higher inflation as well as added signs of life from the global economy were enough to see no change in Policy. Whilst the market is still expecting one more cut before the stance of the RBA neutralises, the Australian dollar rallied hard against its US Counterpart yesterday. Reaching highs of 1.0446 the local unit was also a major benefactor of a weaker Greenback. Opening this morning at a rate of 1.0435, range bound trading is expected in the short-term as investors sit and await results from the US presidential election.

We expect a range today of 1.0400 – 1.0460


New Zealand Dollar
Despite currency markets which have remained relatively subdued in the early parts of this week the New Zealand was in high demand yesterday as the price of dairy products rose 1.1 percent. Given the sale of dairy items remain the nation’s largest export investors snapped up the higher yielding unit taking it to overnight highs of 0.8290. With US presidential elections currently underway a definitive result regardless of who the voters choose, should provide further support for the Kiwi given its link to global risk sentiment. Well supported also by stronger commodity and equity prices overnight the New Zealand dollar opens around 20 basis points stronger this morning currently buying 82.78 US Cents.

We expect a range today of 0.8240 – 0.8300

Great British Pound:
Disappointing markets, in figures released overnight UK manufacturing output gained less than forecast in September, rising by a mere 0.1 percent. In further signs that the economy is struggling to build any momentum the median forecast had originally predicted an increase of 0.3 percent. Struggling to maintain levels close to the 1.60 mark against its US Counterpart the Sterling did receive some support from a weaker Greenback which is feeling the pinch as a result of an unknown election result. Opening this morning slightly higher the Great British Pound is currently trading at 1.5994. Meanwhile on the cross-rates the Sterling is weaker against both the Aussie (1.5322) and the Kiwi (1.9316).

We expect a range today of 1.5280 – 1.5350

Majors:
Global stocks rose as did commodities overnight with one thing becoming even clearer, markets want and need an undisputed result from the US Elections which are currently underway. Given the vast changes in Monetary Policy that we are likely to see should Romney be elected it’s likely the status of Federal Reserve Chairman Ben Bernanke will also be bought into question. Further mudding the waters there remains a huge element of uncertainty and difficultly in figuring out how to avoid the much talked about “fiscal cliff” which is fast approaching in the world’s largest economy, keeping in mind the Democrats are likely to maintain power in the Senate and the Republicans in the House. On the currency front the US dollar is broadly weaker as is the Euro which touched its lowest level since early September of 1.2762. Weighed down by squabbles throughout Greece it feels like forever that we’ve been trying to answer the question of will they, won’t they agree on the austerity conditions required for the heavily indebted nation to receive the funding it so greatly needs.

Data releases

AUD:
No Data Today

NZD: RBNZ Financial Stability Report

JPY:
No Data Today

GBP: No Data Today

EUR:
Retails Sales m/m, German Industrial Production m/m

USD:
10-yr Bond Auction