AUD
The Aussie went into last week on the back of stronger commodity prices, an upward revision of GDP by the RBA and a G-20 summit that came away with a continued fiscal stimulus model. The Aussie failed to disappoint and pushed to new highs for the past 15 months.

On Monday, Home Loans for September (5.1%) were better than expected, Thursday’s Employment Change (24.5K) was better than expected and Unemployment (5.8%) was only slightly higher than the previous month. Business Conditions (12) was better than the previous month however Consumer Confidence (-2.5%) was worse.

Australian export heavyweight China stepped into the ring mid-week, releasing both Industrial Production and Retail Sales data which both grew from the previous month. The expected GDP figure (10%) is also larger than the previous quarter which supports China’s expanding economy and resilience from the economic slowdown in the US. It also reduces speculation that China’s industrial sector has significant excess capacity.

After China’s above data releases, the higher-yielding commodity linked AUD pushed higher relative to risk appetite however demand for the AUD fell away when China released lending figures (US$37 billion) which reflected a significant reduction in lending (-51%).

The recent inflation figures for China’s CPI and PPI does not reflect an overheating economy whilst the current trade deficit and widening fiscal deficit in the US suggests a slow recovery and a slight risk of stagflation.

Australia’s unemployment figures on Thursday morning saw the AUD strengthen. It weakened in overnight trade, only to strengthen again on Friday with risk appetite as reflected by the S&P500.

The week ahead in Australia
Wednesday 18th – Westpac Leading Index, Wage Price Index.

AUDUSD
The pairing performed well early in the week and pushed higher until Thursday when it reached 0.9370 and then fell away to close the week at 0.9250.

The week ahead in the US:
Monday 16th – NY Empire State Manufacturing Index, Retail Sales, Business Inventories, Fed’s Bernanke Speech.
Tuesday 17th – PPI, Net Long-term TIC Flows, Capacity Utilisation, Industrial Production, NAHB Housing Market Index ABC/Washington Post Consumer Confidence.
Wednesday 18th – Building Permits, CPI, Core Personal Consumption Expenditure, Housing Starts.
Thursday 19th – Continuing Jobless Claims, Leading Indicators, Philadelphia Fed Manufacturing Survey.

AUDGBP
The pairing opened the week at 0.5525, reached new highs of 0.5650 on Thursday and then fell away to close the week at 0.5572.
 
The week ahead in the UK:
Monday 16th – Rightmove House Price Index.
Tuesday 17th – CPI, Core CPI, Retail Price Index.
Wednesday 18th – BoE Minutes, CBI Industrial Trends Survey.
Thursday 19th – M4 Money Supply, Mortgage Approvals, Public Sector Net Borrowing, Retail Sales.

AUDEUR
The pairing pushed from strength to strength throughout the week, opening the week at 0.6180 and closing the week close to the high at 0.6235.

The week ahead in the Eurozone:
Monday 16th – CPI.
Tuesday 17th – Trade Balance.
Wednesday 18th – Current Account, Construction Output.
Friday 120th – PPI (Germany).

NZD
The New Zealand dollar had a turbulent week, assisted by comments by the RBNZ, local economic data and risk appetite. There is upward pressure on the Kiwi due to there being a larger proportion of the economy being made up of exports (30%) which means it is closely tied to the global recovery. Inflation is also a larger factor in New Zealand, which in the past has required the central bank to aggressively raise interest rates. There is also less liquidity in the New Zealand dollar which has meant the currency climbs faster when the market is bullish on the currency.

To start proceedings on Monday, Fonterra Cooperative Group Ltd., the largest dairy exporter in the world, increased forecasts for milk prices and the NZD strengthened as a result. Milk prices have increased by 95% since September, increasing the earnings paid to the farmer-shareholders. Credit Card Spending (-0.2%) was significantly higher than the previous month, the Food Price Index (-1.5%) was significantly less than the previous month, PMI (50.6) was largely unchanged whilst Retail Sales (0.2%) was significantly less than the previous month (1.1%). The economic data was largely bearish for the NZ economy.

RBNZ governor Alan Bollard’s comments had the effect of weakening the Kiwi, saying that the currency’s current levels were ‘unlikely to be sustainable’. Despite this, there has been increased speculation that the RBNZ will raise rates before mid-2010, which is maintaining upward pressure on the currency and has the effect of reducing demand for the country’s exports.

The week ahead in NZ:
Friday 20th – Credit Card Spending.

AUDNZD
There was volatility last week for the pairing, opening the week at 1.2516, reaching a high of 1.2640 on Thursday and closing at 1.2610.

GBPNZD
The pairing weakened for most of the week until Thursday when it reached 2.2280 and then bounced to finish the week at 2.2637.

EURNZD
The pairing was relatively stable throughout the week, opening at 2.0230 and closing at 2.0231.

NZDUSD
The NZD opened the week at 0.7333 then gained against the Greenback to peak on Tuesday at the 0.7460 level. It then lost ground from Thursday to close the week at.0.7328.