AUD
The Bank of England prefers not to, the Federal Reserve is unable to do so however Australia’s RBA will use every opportunity to spruik the cash rate and the upward pressure it’s facing and remind the currency markets that they will continue to tighten the country’s monetary belt.

The week started with both the meeting minutes for the October 6 RBA meeting and comments left by RBA officials supporting further hikes including from Glenn Stevens that a ‘very expansionary setting of policy’ is no longer necessary and ‘possibly imprudent’. The governor is conscious of inflation and an overheating economy and to say he is hawkish on interest rates is to put it mildly. This was followed up by the Fed Chairman Ben Bernanke’s comments that night recommending the US increase the national savings rate to establish a ‘sustainable fiscal trajectory’.

Poor US PPI  (-0.6%) data hit the overseas equity markets and the AUD followed suit, as risk appetite was mildly pared back, however by midweek equity markets and further rate speculation had pushed the AUD to new highs for 14 months. The interest rate speculation is reflected in the interbank futures.  The AUD weakened towards the end of the week however as overseas equity markets pulled back and appetite for riskier assets reduced.

The week ahead in Australia
Monday 26th  – Producer Price Index.
Wednesday 28th – Consumer Price Index.
Friday 30th – NAB Business Conditions.

AUDUSD
The pairing showed greater volatility last week and was largely correlated with risk appetite as reflected in the S&P500. The pairing started the week 0.9140, peaked mid week at the 0.9320 level and closed at 0.9251.

The week ahead in the US:
Tuesday 27th – Consumer Confidence, Richmond Fed Manufacturing Index, Treasury’s Geithner Speech, ABC/Washington Post Consumer Confidence.
Wednesday 28th – MBA Mortgage Applications, Durable Goods Orders, New Home Sales.
Thursday 29th – GDP, Real Personal Consumption Expenditures, Initial Jobless Claims, Continuing Jobless Claims.
Friday 30th – Personal Income, Personal Consumption Expenditure Deflator, Chicago Purchasing Managers’ Index, Reuters/Michigan Consumer Sentiment Index.
AUDGBP
The week begun with a sharp rise to 0.5670 and tracked downwards to close the week at 0.5556.

The week ahead in the UK:
Tuesday 27th – CBI Distributive Trades Survey.
Thursday 29th – M4 Money Supply, Net Lending to Individuals.
Friday 30th – Nationwide Housing Prices.
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AUDEUR
The pairing started the week at 0.6135 and then tracked upwards to close at 0.6166.

The week ahead in the Eurozone:
Monday 26th  – Gfk Consumer Confidence Survey (Germany).
Tuesday 27th – M3.
Wednesday 28th – CPI (German).
Thursday 29th – Import Price Index (Germany), Unemployment Rate (Germany), Consumer Confidence.
Friday 30th  – Retail Sales (Germany), CPI.

NZD
Rate speculation has buoyed the NZD with strength in the economy putting pressure on inflation, with there being consensus among economists that there will be a rate rise off the 2.5% floor before the middle of next year. RBNZ Governor Alan Bollard stated last week that NZD strength ‘is not necessarily an impediment to raising the official cash rate’.

Consumer Prices (1.3%) rose in the third quarter which was better than the 0.8% expected, house prices have increased close to 8% since the beginning of the year whilst growth in visitor arrivals (3.8%) was significantly higher than the previous month. The other economic data out for NZ was growth in Credit Card Spending (-2.3%) which was significantly less than the previous months’ figure (0.1%). The RBNZ meets on October 29th and it’s widely accepted that interest rates will be kept on hold, for now.

The week ahead in NZ:
Wednesday 28th – Business Confience, RBNZ Interest Rate Decision.

AUDNZD
AUDNZD started the week at 1.2344 and the Kiwi strengthened against the Aussie with the pairing closing the week at 1.2238.

GBPNZD
The pairing weakened until mid week from where it regained lost territory, starting the week at 2.1984 and closing at 2.1946.

EURNZD
The pairing weakened throughout the week, starting at 2.0102 and closing the week at 1.9813.

NZDUSD
The NZD continued to find strength against the USD, starting the week at 0.7380 and then reaching 0.7630 levels midweek and closing at 0.7536.