Australian Dollar
The Australian dollar continued its upward run yesterday reaching an afternoon high of 1.0602 against its US Counterpart after the RBA, as widely expected kept the official cash rate unchanged 3.50 percent. Whilst the RBA’s accompanying statement failed to shed and further light on future interest rate movements the Australian dollar has now appreciated more than 10 percent against the Greenback since it hit a low of 0.9582 on June 1st. Having failed to establish any real upside support above the 1.0550 handle there appears a general reluctance to take it further despite the attraction of the Higher-yielding asset by foreign Central Banks who have continued to invest in the Australian dollar as a means of diversifying their currency holdings during times of general uncertainty. Meanwhile this morning the Aussie Dollar opens at a very similar level to where we started yesterday, currently trading at a rate of 1.0551.

We expect a range today of 1.0510 -1.0580

New Zealand Dollar:

In comments made public overnight New Zealand’s Prime Minister John Key indicated that the Nations currency had some room to fall as a historically high NZD has taken the pressure off the RBNZ to raise rates given the influence of the exchange rate on the Nations imports, hence reducing inflationary pressures. Falling around half a cent against its US Counterpart the Kiwi opens this morning at a rate of 0.8151 having traded as high as 0.8220 earlier in the session. Whilst the move lower is likely to be a delayed reaction to Key’s comments the Kiwi still remains elevated on many of the major crosses, with the exception of the Aussie. In what is shaping up as big week across markets particular attention will be paid to Chinese Inflationary data due for release tomorrow followed by Trade Balance figures on Friday

We expect a range today of 0.8120 -0.8200

Great British Pound:
In figures released overnight UK Industrial and Manufacturing Production fell less than estimated in June, indicating the depth of the recession may not be as bad as previously thought. With the Bank of England likely to cut their economic outlook when it publishes a new forecast later this evening, such data flows, whilst positive are unlikely to shift the stance that the British economy will remain stagnated for an extended period. In a generally positive session for the Sterling the Great British Pound traded as high as 1.5683 against its US Counterpart and whilst it was unable to hold such gains it still managers to open this morning around 30 basis points stronger at 1.5614. Meanwhile on the cross the Sterling is also stronger against both the Aussie (1.4791) and the Kiwi (1.9128)

We expect a range today of 1.4750 - 1.4830

Majors:
Global Stocks hit a three month high overnight as investors remained hopeful of further stimulus out of the ECB and the US Federal Reserve. In a strange move which has seen riskier assets well backed, the underlying economic picture has not matched the optimism seen over the early parts of this week. With economic data from around the globe continuing to disappoint, Italian GDP came in well below expectation at -0.7% whilst German Factory orders also dropped 1.7%. Providing further evidence that the economic reality has become discounted from the underlying fundamentals, there are some very real concerns of what may unfold should the ECB fail to fully embrace previous promises that the central bank will do “whatever it takes to preserve the euro”. In currency happenings overnight the shared currency enjoyed a relatively subdued session as it traded between a 24 hour range of (1.2375 -1.2441) against its US Counterpart opening overall unchanged this morning at 1.2395.

Data releases

AUD:
Home Loans m/m

NZD: No Data Today

JPY:
Current Account

GBP: BOE Inflation Report

EUR:
German Industrial Production m/m, German 10-y Bond Auction, French and German Trade Balance

USD:
Prelim Non-farm productivity q/q, Prelim Unit Labour Cost q/q