United States Dollar: As expected, another quiet day yesterday with little for the market to sink its teeth into in terms of data. GBP/USD bounced between the 1.5350 and 1.5520 levels with little direction. An article in the Telegraph yesterday did little to help the pound, citing a report by the Chartered Institute of Personnel and Development that warns as many as 200,000 jobs could be shed in 2011. The only data of note today comes from the U.S. in the form weekly jobless claims, Chicago PMI, and pending home sales which could see some volatility in very thin markets. GBP/USD opens this morning at 1.5517 and there is likely to be resistance at the 1.5550 level.
– We expect a range today in the GBP/USD rate of 1.5450 to 1.5550
Euro: EUR/USD had another choppy day with no real themes driving trade. We saw Spanish November Retail Sales come in at -1.5% YoY, in line with expectations, giving the fifth consecutive drop in figures, but the main movements followed the results of a very strong US 7-year note auction which saw Treasury yields slump and erase the gains they made yesterday, driving the dollar lower. GBP/EUR has been quiet and range bound, and we would expect it to remain this way through the rest of this week. It opens this morning at 1.1730.
– We expect a range today in the GBP/EUR rate of 1.1680 to 1.1740
Aussie and Kiwi Dollars: There was certainly a feel of “risk on” yesterday and another new high for AUD/USD as it hit 1.0197, just falling shy of the 1.0200 level where you suspect there to be some significant selling interest. Higher commodity prices, reverse diversification, news of AUD positive M&A flows, and a strong US Treasuries auction all added to the Aussie’s lustre yesterday as it continued to move higher. The currency even managed to shrug off news of heavy flooding in the resource rich state of Queensland. The NZD was close to a five week high against the dollar after the MSCI World Index of stocks recovered all of its losses since the start of the global financial crisis in 2008. Risk sentiment is certainly benefitting the antipodean currencies, as investors seek their extra yield. We did see some profit taking after the HSBC China PMI came in at 54.4 (from 55.3 in November) which saw the AUD and NZD slump somewhat. GBP/AUD and GBP/NZD still remain lowly and open today at 1.5270 and 2.0220 respectively.
– We expect a range today in the GBP/AUD rate of 1.5190 to 1.5280
– We expect a range today in the GBP/NZD rate of 2.0190 to 2.0240