Australian Dollar: Over the years the Australian dollar has had a habit of going up by the stairs and coming back down via the lift. It certainly took the express ride yesterday and fell to fresh 5-month lows against the greenback at 0.9930 during morning trade. It was another day of fear and panic on equity and currency markets which saw the Aussie sink from yesterday’s opening level of 1.0180, breaking below parity for the first time since March.

Risk assets are being dumped on concerns over global growth as interest rate markets increase their bets of a cut in the official cash rate from 4.75 per cent. News the big banks had started cutting fixed rate home-loans added further pressure to the currency. During the offshore session the Aussie rallied all the way back to 1.0350 and we open around that level this morning after the US Federal Reserve pledged to keep rates on hold until mid-2013 which weakened the greenback across the board.

We expect a range today of 1.0250 – 1.0480

New Zealand Dollar: The New Zealand Dollar took another battering during Tuesdays domestic session falling to a two-and-a-half month low of 0.7969 against the greenback. As markets express fear and panic over the global economic growth outlook, traders are selling risk assets and scaling back expectations of an interest rate rise in NZ.

Support for the kiwi came in beneath the US80 cent mark and in a continuation of the recent volatility, the unit rallied and entered the offshore session trading around 0.8190. The kiwi opens today at 0.8368 and rallied to a 24-hour high of 0.8388 after the US Federal Reserve pledged to keep rates on hold until mid-2013 which weakened the greenback across the board.

We expect a range today of 0.8280 – 0.8450

Great British Pound: The Pound (1.6280) gave away yesterday’s gains on the Greenback as another wave of panic selling dictated trade in the Asian session. FX trading using fundamentals has basically been put to one side as the effects from Friday’s Standard and Poor’s downgrade of US debt continues to impact markets, with participants still unsure of how it will play out in the coming weeks.

Cable fell to an overnight low of 1.6175 as manufacturing data declined in June and the trade deficit widened. The unit bounced dramatically late in the session as the greenback weakened against several major currencies. Meanwhile, the pound opens weaker against both the Australian Dollar (1.5700) and the New Zealand Dollar (1.9450).

We expect a range today of 1.5650 – 1.5800

Majors: The Swiss Franc (USD/CHF 0.7190) and the Japanese Yen (USD/JPY 77.00) both continued their recent rallies against the greenback as markets remain volatile and investors eschew risk and retreat into the afore-mentioned safe-haven currencies. Gold (US$1,744/oz) also hit fresh all-time highs just shy of US$1,780/oz. The US Dollar tumbled across the board late in the session after the Federal Reserve pledged to keep rates at a record low at least through to the middle of 2013. The Euro rallied to an overnight high of 1.4373 after the Fed offered a more downbeat view for the economy than it did in June stating that growth was “considerably slower” than it had expected. Markets were largely disappointed with the Fed’s statement which stopped short of mentioning any plans for a third round of large-scale asset purchases (aka quantitative easing). .

Data releases

AUD: Consumer confidence, August

NZD: No data today

JPY: BoJ board meeting minutes, July

GBP: Consumer confidence, July; Bank of England inflation report

EUR: German CPI, August

USD: No data today