Aussie and Kiwi Dollars / British Pound

Aussie and Kiwi Dollars: Trading in the Aussie was choppy last week, and the US discount rate raise did not bode well for the high yielders in general. Despite this, the Aussie finished slightly stronger on the week at levels just below 0.9000. Continued buying over a hawkish outlook from the RBA will likely provide buoyancy for the Aussie this week, and should volatility remain low, AUD/USD is likely to push back above last week’s high of 0.9036, and then on to levels above 0.9150. News out overnight has done little to dampen sentiment, with new motor vehicle sales falling by 3.4%. Against the pound, the Aussie continues to outshine, ending last week on a high. GBP/AUD traded as low as 1.7154 overnight, and we open just above there at 1.7180 this morning. Further east and the situation is equally as bullish, with the Kiwi trading up to 0.7037 against the dollar and as low as 2.2000 against the pound. The upcoming budget in New Zealand will see Prime Minister John Key unveil tax cutting packages across the board for NZ residents. A closer look however shows that he plans to fund this by increasing the GST (their version of VAT), which is unlikely to change money growth, and thus will have little direct impact on the Kiwi.

- I expect a range today in the GBP/AUD rate of 1.7100 to 1.7250

- I expect a range today in the GBP/NZD rate of 2.1950 to 2.2100