Australian currency market

A volatile day on the Australian currency market, with the release of the Australian CPI generating a mixed reaction in the Australian Dollars.

The immediate Australian Dollars impact is neutral because of the Reserve Bank Australia's earlier comments that it will look through high numbers, due to slowing in the household consumption sector. The US Dollar has not staged a convincing recovery due to the sluggish US economy.

It will be very difficult for the Australian Dollars to fall much in the short-term against a "heavy" US Dollar. In later Asian trade today, the Australian Dollars was dragged lower by a falling New Zealand Dollars. The New Zealand Dollars came under large downward pressure when high-profile New Zealand finance company, Hanover Finance, announced it was freezing new investments and return of deposits.

The immediate and rapid fall in the New Zealand Dollars comes less than 24 hours ahead of the RBNZ meeting. If the RBNZ holds fire tonight and leaves rates unchanged, buying opportunities in Australian Dollars to New Zealand Dollars (AUD/NZD) could open up below 1.2700.

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Pounds to Australian Dollars last at 2.0545