Australian Dollar: The Aussie opens sharply lower this morning at 1.0040 after the US Federal Reserve announced further measures to reduce borrowing costs, strengthening the greenback across the board. Yesterday, the Aussie received a boost during the domestic session after a leading indicator of economic growth was upwardly revised. The Aussie hit 1.0275 after Westpac’s leading index for July rose 1.4 points 284.2 to show annualised growth of 3.1 per cent. However, ongoing weakness in consumer spending and building activity are likely to drag on growth towards the end of the year adding support to the view the Reserve Bank are likely to cut rates at some stage. During the offshore session, the unit moved sharply lower hitting 1.0033 as traders eschew risk and increase their holdings of so-called safe havens such as the Japanese Yen.

We expect a range today of 0.9980 – 1.0100

New Zealand Dollar: The Kiwi opens sharply lower this morning at 0.8015 after the US Federal Reserve announced further measures to reduce borrowing costs, strengthening the greenback across the board. Yesterday, traders were content to mark time for much of the domestic session ahead of today’s growth data with the unit moving in a 30-point band above US82 cents. The data is due for release shortly with expectations of slower gross domestic product in the second quarter. Rallies in the kiwi are short-lived at the moment as local interest rates are likely to remain at 2.50 per cent as global economic concerns weigh on the mind of the Reserve Bank of New Zealand. On the cross rates, the kiwi opens lower against the Australian Dollar at 0.7965.

We expect a range today of 0.7980 – 0.8110

Great Britain Pound: The Pound continues to feel the brunt of selling as markets continue to shy away from regions associated with risk as a combination of varying reports (IMF/World Bank) continue to paint a sobering picture of world growth over the next 1 to 2 years. The Pound, which opens sharply lower today at 1.5490, has lost almost 4.6% in value or 7 pence against the Greenback since the beginning of the month (1.6456) as traders continue to speculate that rates in the UK will remain on hold until well into late 2012 and the fact that austerity recently launched to kick start the economy have so far failed to achieve real growth. The minutes of the Bank of England’s minutes from its previous policy meeting will be the main focus of the markets this evening, with many expecting the voting to remain at 0 – 9 to leave rates on hold however it will be the number of members that voted for an increase to the current Quantitative Easing Programme (currently at GBP200 billion) that should add to GBP volatility. Meanwhile, the pound has managed to outperform overnight both the Australian Dollar (1.5430) and the New Zealand Dollar (1.9343).

We expect a range today of 1.5400 – 1.5510

Majors: The greenback rallied across the board in late trade after the US Federal Reserve announced it will increase its holdings of longer-dated treasuries to reduce borrowing costs and boost economic growth and employment. The Japanese Yen (76.61) is approaching fresh post-war highs against the US Dollar as traders eschew currencies linked to risk and retreat to safe havens. The US central bank will buy US$400 billion in bonds with maturities six to 30 years which is intended to “put downward pressure on longer term interest rates and help make broader financial conditions more accommodative” according to a statement from the FOMC. The Fed action comes after yesterday’s IMF report said the world’s largest economy will expand 1.5 per cent this year, down from 2.5 per cent projected in June. Meanwhile, the Euro opens lower against the greenback at 1.3560 compared to 1.3700 this time yesterday.

Data releases

AUD: No data today

NZD: GDP, Q2

JPY: No data today

GBP: No data today

EUR: Euro Zone Industrial new orders; Consumer confidence, July

USD: Leading indicators, August