:: Australian Dollar: Australia's dollar fell from its highest level in almost three weeks to an intraday low near 87 cents on the back of a drop in imports of iron ore and copper by China, the nation's biggest trading partner. A rise in home loan approvals for the first time in eight months allowed the Aussie to regain some of its early morning losses. The improvement suggested Governor Glenn Stevens may have the scope to resume aggressive monetary measures to quell rising inflationary pressures. Offshore the Aussie staged a comeback reversing its losses as investor risk appetite improved. This morning the Aussie opens buying 0.8773 USD.

- We expect a range today in the AUD/USD rate of 0.8720 to 0.8800

:: Great Britain Pound: The Sterling fell early offshore to 1.4948 against the Greenback, its lowest level in almost 2 weeks after S&P confirmed it would maintain its negative outlook on Britain's AAA rating. Overnight the nation's Current Account was reported to be in the red by more than 9.6 billion Pounds, doubling market expectations. However GDP was on the mark at 0.3% while services surprised jumping 0.6% from a previous result of 0.2%, exceeding a general market consensus of 0.4% improvement. The Pound recovered to 1.5085 US as speculation mounted about a takeover bid for BP Plc after the U.S. government reportedly gave Exxon Mobil the green light to look at a bid for the UK oil producer. This morning the Pound opens at 1.5026 against the Greenback and 1.7150 Aussie.

- We expect a range today in the GBP/AUD rate of 1.7100 to 1.7200

:: New Zealand Dollar: The Kiwi survived an early London sell-off bouncing back from its overnight lows around 0.7055 to open this morning on its highs around 0.7130. With little in the way of economic data released overnight the Kiwi put in a strong performance considering the relative strength of the Greenback against the majors. This morning's June N.Z Food Price data which is an important component of CPI will be closely watched with the market looking for a recovery back into positive territory from the previous months -0.7% result. The late rally in the NZD/USD puts the AUD/NZD cross rate lower exchanging marginally below 1.2300 this morning.

- We expect a range today in the NZD/USD rate of 0.7075 to 0.7175

:: Majors: The Japanese Yen fell in the wake of a much larger than expected loss by the ruling Democratic Party of Japan in the country's Upper House elections. The DPJ was only able to secure 44 seats, less than 40%, of the 121 contested. The loss makes it highly unlikely Prime Minister Naoto Kan's proposed consumption tax intended to curtail some of the budget deficit is unlikely to pass in the foreseeable future. Amid the political turmoil the USD/JPY rose above 89.00 during Asia before dipping back into the mid 88.00s offshore. Meanwhile the Euro slid to an intra-day low of 1.2550 US early offshore as investors grew more concerned about the transparency of the information that will be released from the stress tests after a confidential letter from the EU's executive arm revealed "There is considerable opposition to the publication of individual exposures to sovereign debt." This morning the Euro opens buying 1.2590 US while the Greenback/Yen cross opens at 88.63 US.

:: Data Releases:

  • AUD: Jun NAB Business Confidence
  • NZD: Jun Food Prices
  • USD: May Trade Balance
  • GBP: Jun CPI & Jun RPI
  • EUR: Jul ZEW Survey & Jun German Wholesale Price Index
  • JPY: May Industrial Production, May Capacity Utilisation & Jun Consumer Confidence

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