AUD
The Australian dollar began last week regaining lost ground from a week earlier as risk appetite improved and commodity prices, in particular gold, strengthened. The local currency had lost its position as the toast of the currency markets a week earlier and there was concern that the local currency would continue to go flat.

From Monday, risk appetite returned to the market and among other things, favoured the carry trade, whereby investors borrow funds in the US and invest in riskier assets overseas, including Australia. This appetite reflected the significantly better than expected US Existing Home Sales figure (10.1%) and come Wednesday Deputy Governor Ric Battellino came into the fold to say that the economy had begun a ‘new upswing’ which heightened speculation of a rate rise tomorrow.

The Deputy Governor’s comments followed a more measured statement by the RBA a week earlier when the central bank had mentioned that it was weighing up the effect of a strong AUD on the economy. It said that a strong AUD will ‘constrain output and dampen inflationary pressure’ however that ‘a lengthy period with interest rates at a very low level’ carries its own risk.

On Thursday, Business Investment (-3.9%) was significantly worse than expected, however more importantly the AUD tanked on Thursday and Friday after news emerged of the dire straits that Dubai’s property market was in. News that significant debt easing required by neighboring Abu Dhabi was detrimental to the equity markets, however the AUD has since bounced after the effect of the Dubai fallout has been less than first thought.

*Watch out for the RBA Rate Decision on Tuesday at 2:30pm*
 
The week ahead in Australia
Monday 30th – HIA New Home Sales, Company Gross Operating Profits, AiG Performance of Mfg Index.
Tuesday 1st – Building Permits, RBA Interest Rate Decision, RBA Commodity Index SDR.
Wednesday 2nd – AiG Performance of Services Index.
Thursday 3rd – Retail Sales Trend.

AUDUSD
The pairing started the week at 0.9111 and performed well until Thursday when talk about Dubai reached the market and the AUD fell away.

The week ahead in the US:
Monday 30th – Chicago PMI.
Tuesday 1st – ISM Manufacturing, Pending Home Sales, Construction Spending.
Wednesday 2nd – ADP Employment Change, EIA Crude Oil Stocks change, Fed’s Beige Book.
Thursday 3rd – Continuing Jobless Claims, Initial Jobless Claims, Nonfarm Productivity, Unit Labor Costs, ISM Non-Manufacturing.
Friday 4th – Average Hourly Earnings, Average Weekly Hours, Nonfarm Payrolls, Unemployment Rate, Factory Orders.

AUDGBP
The pairing opened the week at 0.5527 and was relatively stable until the end of the week where it closed at 0.5487.
 
The week ahead in the UK:
Monday 30th – Gfk Consumer Confidence, M4 Money Supply, Mortgage Approvals, Net Lending to Individuals.
Tuesday 1st – PMI Manufacturing.
Wednesday 2nd – PMI Construction.
Thursday 3rd – PMI Services.

AUDEUR
The pairing opened the week at 0.6137 and dropped for most of the week to close at 0.6031.

The week ahead in the Eurozone:
Tuesday 1st – Retail Sales (Germany), PMI (Germany), Unemployment Change (Germany), PMI Manufacturing, Unemployment Rate.
Wednesday 2nd – PPI.
Thursday 3rd – PMI Services, GDP, Retail Sales, ECB Interest Rate Decision.

NZD
The New Zealand dollar tracked risk appetite throughout the week, and was significantly weaker after the Dubai news as the NZD currency movements are heavily tied to the recovery of the global economy. The fall in the financial markets centred on the fact that the investment company Dubai World required a re-scheduling of outstanding debt.

On Wednesday Business Confidence had risen to a 10-year high and on Thursday, the country’s trade deficit (-487m) had narrowed. The figure, however was slightly larger than expected. Exports in New Zealand have fallen (-22%) from a year earlier, largely due to a reduction in demand for dairy products, seafood and timber.
 
The week ahead in NZ:
Thursday 3rd – ANZ Commodity Price.

AUDNZD
The Aussie performed well against the Kiwi last week, opening at 1.2613 and closing the week at 1.2692. The NZD was slightly less affected than the Aussie from the Dubai fallout.

GBPNZD
The pairing opened the week at 2.2763 and tracked upwards to close the week at 2.2989.

EURNZD
The pairing opened the week at 2.0491 then performed well to close the week at 2.0906.

NZDUSD
The NZD opened the week at 0.7428 then peaked in overnight trade on Monday at 0.7520 levels and then progressively fell to close the week at 0.7303.