Australian Dollar
A surprise 0.9% increase in retail sales as well as a better than expected 7.4% increase in building approvals gave the Australian dollar the support it needed on Monday morning in Asia, as the aftermath of French and Greek elections weighed on risky assets. Surpassing economists’ predictions, such figures from two of the known lagging sectors of the domestic economy caused the Aussie to rally from lows of 1.0115 to trade just above 1.0130. Heading offshore, this momentum helped to pare some more of the Aussie’s recent losses and this morning we find ourselves back in familiar territory at 1.0200. Highlight of the Asian session today is the Australian trade balance, where economists have predicted a widening of the deficit to 1.38 billion dollars. If this release fails to create volatility then tonight, those with a vested interest will be watching keenly as Treasurer Wayne Swan delivers the Annual Budget to the nation.

We expect a range today of 1.0120 - 1.0260

New Zealand Dollar
The New Zealand Dollar traded heavily off support near 0.7910 for the most part of Monday as a quiet local session left markets to dwell on the weekend’s events. Risk appetite was lifeless and a lack of local data did little to help during Asian hours although as the overnight session wore on investors started to unwind their positions and buy back into the market. Pushing back towards 0.7960, the Kiwi opens this morning at 0.7950 against the greenback, although the ongoing political concerns in Europe will likely weigh on risk sentiment as the week progresses. Better than expected retail sales and building approvals from across the Tasman has pushed the Kiwi lower against its Australian counterpart, however, and the pair currently trade at 1.2825 (0.7797).

We expect a range today of 0.7900 – 0.7990

Great British Pound
A national holiday in the United Kingdom left Sterling to drift with market sentiment yesterday, and subsequently it fell to find support near 1.6120 when risk appetite was at its lowest. A pick up into the European session lifted the Pound and the recently resilient unit battled back to pare earlier losses and trade just short of 1.6200. Sitting at 1.6190, some early movement today may stem from the RICS house price balance due out although a lack of scheduled events during local hours will leave Cable at the mercy of sentiment. In trend with most rapid fire moves over the past 24 hours, the GBP/AUD and GBP/NZD have also fallen from recent highs and trade this morning only slightly lower at 1.5870 and 2.0350 respectively.

We expect a range today of 1.5790 – 1.5950

Majors
The Euro has pared yesterday’s losses against the Greenback as the nervousness and uncertainty that send markets lower calmed. Although the uncertain political environment in Europe remains, along with concerns over US economic growth, markets deemed the severity of the sell off unwarranted and the Greenback has given back some of its gains. Gaining a minor boost from a 2.2% increase in German factory orders, the Euro has lifted to 1.3050 after previously dipping to three and a half month lows near 1.2950. Effects of last weeks disappointing unemployment figures in the United States are still also weighing on the US Dollar against the Japanese Yen , where in a risk off environment the Japanese Yen is once again showing its holds preference over the Greenback. Remaining below 80.00, the pair has drifted higher however, to trade this morning just below 79.90. With an otherwise quiet day expected markets will likely remain trading with European uncertainty hanging overhead.

Data releases:

AUD: Trade Balance; Annual Budget Release

NZD: No data due for release

JPY: No data due for release

GBP: RICS House Price Balance

EUR: German Industrial Production m/m

USD: No data due for release

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