AUD
The AUD was back in familiar territory last week, offering a strong performance as we saw risk appetite return to the market, a rate hike by the RBA, mixed economic data and a return of bullish AUD comments from the central bank and the Government.

Treasurer Wayne Swan kicked off proceedings on Monday by saying that the predicted GDP for the 09/10 Financial year had been revised upwards 1.0% to 1.5% which firmed expectations of a rate rise the following day. The RBA did raise the cash rate 25bp to 3.50% and the local and overnight markets were momentarily bearish on the AUD, as a 50bp rise had been partially priced in. Furthermore Governor Stevens comments were less bullish than usual saying it was ‘prudent to lessen gradually the monetary stimulus’.

The Australian data following the rate rise was mixed with the better than expected House Prices (4.2%) supporting the rate hike and worse than expected Retail Sales (-0.2%) questioning its validity. Exports however rose for the month by 5% suggesting the strong Aussie had had less of a negative impact on demand for our tradeables.

The local currency bounced on Wednesday however, as appetite for riskier assets flooded back into the market after the Federal Reserve maintained it would keep interest rates low. This saw commodity markets perform well, benefiting the higher yielding and commodity-linked Aussie. This risk appetite continued for the rest of the week, despite mixed US employment data on Friday with Non-Farm Payrolls (–190K) worse than expected and Average Hourly Earnings (0.3%) slightly better than expected.

To close the week, the RBA released a statement revising the expected GDP figure upwards to 3.25% in 2010. The Deputy Governor also gave an insight into the country’s economic future saying that there will be pressure on labour and housing markets as the country faces an ‘extended period of prosperity in the years ahead’.

After the rate hike and races on Tuesday, it was definitely familiar turf again for the Aussie, which found some vocal supporters in the stands.

The week ahead in Australia
Monday 9th – ANZ Job Ads, Home Loans, Investment Lending.
Tuesday 10th – NAB Business Conditions.
Thursday 12th – Employment Change, Unemployment Rate

AUDUSD
The pairing performed well early in the week reaching 0.9120, however there was a fall after the rate decision which was quickly recovered, closing the week at 0.9117.

The week ahead in the US:
Tuesday 10th – ABC/Washington Post Consumer Confidence.
Thursday 12th – Continuing Jobless Claims, Initial Jobless Claims, API Crude Oil Inventories, Monthly Budget Statement.
Friday 13th – Import Price Index, Trade Balance, Reuters/Michigan Consumer Sentiment Index.

AUDGBP
The pairing started the week at 0.5435 and reached levels of 0.5540 before the rate decision only to close the week at 0.5492.
 
The week ahead in the UK:
Tuesday 10th – ABC/Washington Post Consumer Confidence.
Thursday 12th – Continuing Jobless Claims, Initial Jobless Claims, API Crude Oil Inventories, Monthly Budget Statement.
Friday 13th – Import Price Index, Trade Balance, Reuters/Michigan Consumer Sentiment Index.

AUDEUR
There pairing started the week at 0.6052, tracked upwards and then fell to 0.6068 before strengthening again to close the week at 0.6129.

The week ahead in the Eurozone:
Monday 9th – Trade Balance (Germany), Industrial Production (Germany), Sentix Investor Confidence.
Tuesday 10th – CPI (Germany), ZEW Survey – Economic Sentiment.
Thursday 12th – ECB Monthly Report, Industrial Production.
Friday 13th – GDP (Germany), CPI, GDP.

NZD
The New Zealand dollar had a volatile week against the majors last week. There was mixed economic data with wages (0.4%) better than expected for Q3 however the unemployment rate (6.5%) was significantly higher than expected.

RBNZ Governor Alan Bollard’s comments mid-week that the recovery will be ‘slower and more vulnerable’ relative to Australia had a negative effect on the NZD. This no-doubt had the desired effect given the rapid rise of the NZD this year and the effect this has had on exports which adds risk to the New Zealand recovery. Exports make up a large proportion of the country’s economy at 30%.

The week ahead in NZ:
Monday 9th – Credit Card Spending.
Tuesday 10th – Food Price Index.
Wednesday 11th – Business NZ PMI, Retail Sales.

AUDNZD
The NZD weakened throughout the week against the AUD, initially opening at 1.2493 and then closing at 1.2622.

GBPNZD
The pairing was particularly volatile last week, opening at 2.2841 and closing near the high for the week at the 2.3000 level.

EURNZD
The pairing started the week at 2.0513, falling to 2.0320 on Thursday morning, then closing at 2.0571.

NZDUSD
The NZD gained against the Greenback over the course of the week, opening at 0.7079 and closing at 0.7210 after reaching highs of 0.7300.