Australian Dollar
The Australian dollar opens lower this morning following what was a rollercoaster ride of inflated expectations and disappointment following a lack of action taken by the ECB. After receiving a boost during local hours, with both retail sales and terms of trade coming in above expectations, the Aussie continued on an upwards trajectory to touch four and a half month highs towards 1.0570 by the European session. The fall from these levels was sharp however and although the Australian Dollar weathered the sell-off rather well, it still found lows near 1.0440; at the same time euro weakness saw it rise to new all time highs above 0.8610. Today, non-farm payrolls out of the US remains the last key risk event for the week as the number may provide further insight as to policy measures the US Federal Reserve may consider in the future.

We expect a range today of 1.0400 – 1.0510

New Zealand Dollar
Although not a lot materialised from the anticipated ECB meeting last night, the currency markets certainly put on a show as hype, speculation and latter disappointment moved the currencies. The New Zealand dollar, although somewhat insulated from the volatility due to its lack of direct exposure to Europe, still tested recent ranges with a spike towards 0.8170 writing in new three month highs before the sell-off took the local unit to support at 0.8080. As investors fled from the euro the EUR/NZD fell briefly below 1.5000 for the first time ever and this morning trades at 1.5045 (0.6647) as markets settle following a volatile night. The regional economic calendar is rather quiet for the rest of the week however US unemployment figures will be key to risk sentiment into the end of the week. The AUD/NZD stayed calm amongst all of the excitement and trades this morning at 1.2915 (0.7743).

We expect a range today of 0.8040 – 0.8130

Great British Pound
Somewhere amongst the commotion in Europe last night, the Bank of England held its own central bank meeting and as expected they left policy unchanged. Waiting to assess the likely impact of previous rises in asset purchasing, as well as bank lending programs, markets seemed happy with this and Sterling held its ground relatively well. Still slipping against the Greenback as the ECB meeting sent investors back to its perceived safety, ground was made against the euro with the cross rate reaching highs near 1.2770. Helped by a better than expected reading for construction PMI Cable trades this morning just above 1.5500 and similar levels have been held against the Aussie at 1.4830; GBP/NZD has slipped moderately though, down to 1.9170 this morning.

We expect a range today of 1.4770 – 1.4900

Majors
Hopes and expectations of finally getting some bold steps towards solving Europe’s debt crisis fizzled last night as Mario Draghi failed to live up to the hype surrounding his pledge to do all he can to save the euro. This month’s ECB meeting was arguably one of the most anticipated this year and instead of announcing a bold plan to soothe periphery bond yields it really provided nothing new. Leaders are still working on the framework of a plan however no details nor timeframes were provided and to add fuel to the fire, Draghi announced Germany’s Bundesbank has reservations about his plan to buy bonds. Earlier excitement saw the euro trade up towards 1.2400 although a dramatic plunge led to lows of 1.2135 before settling to 1.2180 this morning. The US Dollar no doubt benefited from the lack of ECB action as investors sought safety although it faces its another risk event tonight in the form of non-farm payrolls. A solid number bodes well for the US economic recovery whilst a weaker number will likely restart quantitative easing speculation, placing downward pressure on the USD. At time of writing it trades against the Japanese Yen at 78.20.

Data releases:

AUD: AIG Services Index

NZD: No data due for release

JPY: No data due for release

GBP: Services PMI; Halifax HPI m/m

EUR: Retail Sales m/m;

USD: Non-Farm Employment Change; ISM Non-Manufacturing PMI; Unemployment Rate