Australian Dollar
The battle with $1.05 has continued for the Australian dollar over the past 24 hours and a lack of momentum saw 1.0475 banked in local hours before a switch offshore improved the mood. A public statement of support for the ECB by German Chancellor Angela Merkel served to reassure markets that euro-zone officials are working together to solve the regions debt troubles. This morning the Aussie opens above the 1.0500 handle at 1.0510 after briefly touching 1.0525 late in New York hours, as rising commodity prices have also helped lift the local unit. Today, there is an absence of any locally scheduled releases however ongoing events in Europe and the US will likely continue to sway market sentiment.

We expect a range today of 1.0460 – 1.0560

New Zealand Dollar
The New Zealand dollar posted gains against most of its major counterparts yesterday, as strengthening commodity prices helped boost the outlook for the nation’s economy. Posting highs of 0.8080 in its local session, the Kiwi continued higher offshore as some disappointing manufacturing data weakened the Greenback and markets bought back risk following words of support from Angela Merkel in regards to the ECB’s bond-purchasing plans. Touching highs of 0.8115 late in the North American session the Kiwi opens only just off these levels ahead of producer price data this morning.

We expect a range today of 0.8070 – 0.8150

Great British Pound
Cable reached its highest level in two and a half weeks yesterday, as retail sales unexpectedly rose 0.3% over the course of July. With markets predicting a flat reading, the Pound was subsequently bid to reach 1.5740 against the Greenback and 1.2800 against the euro, although increased confidence towards the euro zone’s debt-fighting plans meant Sterling was unable to hold onto its gains against the shared currency. Cable however remains supported above 1.5730 this morning ahead of what looks like to be a quiet day to end the week; trade on the antipodean crosses sees the Pound higher against the Aussie at 1.4965 but lower against the Kiwi at 1.9400.

We expect a range today of 1.4910 – 1.5040

Majors
The euro pared recent losses yesterday after German Chancellor Angela Merkel publically supported the ECB’s approach to tackling rising borrowing costs in countries such as Spain and Italy. Some words of support and a restoring of confidence that euro zone leaders are on the same page, enabled the recently troubled euro to gain nearly a full cent to touch highs of 1.2370 by the North American session. A greater than expected fall in the Philadelphia Fed’s manufacturing index also gave rise to some weakening of the Greenback as continually soft economic data will add support to the case for more quantitative easing. The Greenback still managed to post a net gain against the Japanese Yen however, as three-month Treasury yields boosted the attractiveness of US Dollar -denominated assets. The final day for trade this week starts off with EUR/USD higher at 1.2355 and USD/JPY above 79.30 for the first time in over a month; US consumer sentiment figures are scheduled for release this evening as well as German PPI and EZ trade balance and current account figures.

Data releases:

AUD: No data due for release

NZD: PPI Input q/q, PPI Output q/q

JPY: No data due for release

GBP: No data due for release

EUR: German PPI m/m; Current Account; Trade Balance

USD: Prelim UoM Consumer Sentiment; Prelim UoM Inflation Expectations