United States Dollar: UK manufacturing and industrial production data printed weaker than expected on Tuesday morning. Output fell 0.7% in October, the first fall in five months and vs. expectations for a rise of 0.2%. GBP/USD fell to a low of 1.5630 following the release, but it was a little odd that it didn’t fall further. The dollar weakened throughout the afternoon session and cable traded to a high of 1.5714. There wasn’t any top tier US data released yesterday. Instead investors took their lead from what’s happening in China at the moment – China’s inflation rate eased to a five-year low in November, according to data released overnight. The prospect of stimulus has perhaps weighed on the greenback. GBP/USD opens this morning at 1.5690. UK trade balance numbers are due at 9:30 this morning whilst there isn’t a whole lot of data due from the US.
We expect a range today in the GBP/USD rate of 1.5600 to 1.5725
Euro: EUR/USD made steady gains throughout the day on Tuesday. After starting the day at 1.2340 yesterday morning, it ended up trading to a high of 1.2447. Euro zone data wasn’t particularly inspiring – German trade data printing stronger than expectations was probably the standout. The move was largely a result of the sell-off in the dollar. That said, as the New York session came to a close on Tuesday, EUR/USD fell back and it has traded a narrow range throughout the Asian session. Weak French industrial production data, released this morning, has put a bit of a dent in the single currency already and the pair opens at 1.2390. It’s a bit weaker vs. the pound too and GBP/EUR trades at 1.2655 currently.
We expect a range today in the GBP/EUR rate of 1.2610 to 1.2720
Aussie and Kiwi Dollars: AUD/USD and NZD/USD spiked to respective highs of .8362 and .7753 yesterday afternoon. They then settled lower during their local sessions and open in London at .8315 and .7705. Markets are now gearing up to the RBNZ monetary policy announcement, due this evening. The consensus is for interest rates to remain on hold at 3.5% and there is a fairly strong prospect of the central bank attempting to talk down the value of the kiwi. Australian employment data is also due and this has a tendency to create volatility.
We expect a range today in the GBP/AUD rate of 1.8790 to 1.8920
We expect a range today in the GBP/NZD rate of 2.0280 to 2.0440
AUD: MI Inflation Expectations, Employment Change, Unemployment Rate
EUR: No data
GBP: Trade Balance
NZD: Official Cash Rate, RBNZ Press Conference, RBNZ Monetary Policy Statement,
USD: Federal Budget Balance
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