Australian Dollar
The Australian dollar has broken back above $1.05 overnight as the US Dollar weakened following the FOMC minutes which highlighted the Fed’s willingness to act on quantitative easing should the need arise. Touching lows earlier in the session of 1.0410, the Aussie was struggling to find a reason to rally as it slowly but steadily gave away Tuesday’s gains, however a sharp reaction post-FOMC took the exchange rate 80 points higher within an hour and leaves us to open this morning near 1.0510. Chinese manufacturing figures will no doubt be of key interest in the Asian markets this morning and with an absence of Australian data, also the key directional focus for the Aussie dollar. Off shore this evening, European sentiment will have a significant impact as key meetings and manufacturing data hit centre stage.

We expect a range today of 1.0440 – 1.0550

New Zealand Dollar
The New Zealand dollar spent much of its local session under pressure yesterday, as the currency unit was sold down to see lows of 0.8075 against the Greenback. Although a lack of local data did little to sway the exchange rate, minutes from the Fed’s meeting this month soon instilled some life into the markets as the US Dollar fell against the majority of its counterparts. The Kiwi rose to trade at 81.4 US cents, although it lost some ground against the Euro ahead of some key, crisis-fighting meetings between European leaders over the next few days; EUR/NZD currently trades at 1.5395 (0.6496). Movement on the antipodean cross has been choppy yet slightly tilted in the Kiwi’s favour, after a high of 0.7764 and a low near 0.7730 the NZD/AUD trades this morning at 0.7745.

We expect a range today of 0.8080 – 0.8170

Great British Pound
Sterling moved into the upper half of the 1.58’s against the US Dollar yesterday, recording levels not seen in over three months. Supported by a weakened Greenback facing the threat of QE3, Cable made a sharp jump from 1.5800 to 1.5860 and shuffled ever slightly higher again to open this morning at 1.5880. This evening sees the local release of both BBA mortgage approvals and CBI realised sales, as well as manufacturing figures for key European economies across on the mainland. The Pound has also has a solid 24 hours against the Aussie and Kiwi dollars and this morning it trades up at 1.5120 and 1.9505 respectively.

We expect a range today of 1.5040 – 1.5180

Majors
The Greenback has posted its biggest daily move against the Japanese Yen in nearly two months as the usually conservative pair sprang to life following the FOMC minutes last night. The US Dollar weakened significantly, dropping from 79.20 to 78.40, as the US Federal Reserve indicated in it minutes from the August meeting that they still support the need for stimulus should the US economic recovery not show desired levels of expansion. Stimulus, such as a third round of quantitative easing, directly weakens the currency involved, as additional cash is effectively pumped into the system. This weakness of the US Dollar also helped the Euro climb above the 1.2500 level, trading at 1.2525 this morning, which has proved to have a magnetising effect in the recent past. Europe will no doubt be back in focus this evening as manufacturing statistics are released for key economies as well as the much anticipated Merkel-Hollande meeting.

Data releases:

AUD: No data due for release

NZD: No data due for release

JPY: No data due for release

GBP: BBA Mortgage Approvals; CBI Realized Sales

EUR: European Manufacturing & Services PMI

USD: Unemployment Claims; Flash Manufacturing PMI; New Home Sales

CNY: HSBC Flash Manufacturing PMI