Australian Dollar:
Having started the day around the 1.05 mark against its US Counterpart the Australian dollar headed south intraday. Dragging the local unit to lows of 1.0468 Australia’s trade deficit unexpectedly widened in November to $2.64 billion as stronger imports outstripped the pace of iron ore export growth. Whilst Policy makers continue to wish for added growth outside the mining sector such figures do point towards the possibility of further monetary policy adjustments in the first quarter of this year. Firming as it entered North American trade less than positive European data flows had a minimal impact on the higher yielding asset as the Australian dollar opens overall unchanged this morning at 1.0496. On the outlook today Retail Sales are expected for release at 11:30 am this morning with any figure above 0.3% likely to provide support for the local currency.

We expect a range today of 1.0470 – 1.0530

New Zealand Dollar
Markets have remained uninspired over the past 24 hours with Asian Equity markets reporting minor losses as commodities clung to slight gains. Whilst investors attention is likely to remain on US Debt Ceiling negotiations, to this point riskier backed assets have surprisingly weathered the storm remarkably well. Given the presence of weaker than expected data flows from Europe overnight the New Zealand dollar has overall remained solid, trading between a 24 hour range of (0.8334 – 0.8377) against its US Counterpart. Opening this morning buying 83.64 US Cents currency markets are once again set for a relatively quite day ahead with data flows due out of China tomorrow likely to provide short-direction.

We expect a range today of 0.8330 – 0.8400

Great British Pound:
UK Stocks fell yesterday with investors instead choosing to wait for the beginning of the US earnings season. Whilst some very real concerns do remain that the recent rally in equity markets may have been over-done the medium term focus of the market will continue to be US debt ceiling talks. Losing around half a cent in overnight trade the Sterling reached lows of 1.6028 against its US Counterpart rebounding only slightly to open this morning at 1.6056. Meanwhile on the cross-rates the Great British Pound has also struggled opening lower against both the Aussie (1.5294) and the Kiwi (1.9193).

We expect a range today of 1.5270 – 1.5330

Majors:
In a muted session across currency markets yesterday US Stocks fell for second consecutive day as investors await the beginning of fourth-quarter earnings reports. Whilst investors also keep a close eye on ongoing debt negotiations the Greenback has been marginally stronger across the board overnight with the exception of the Japanese Yen which has gained ground against its US Counterpart this week after touching its weakest level of 88.41 since July 2010, this morning it opens at a rate of 87.185. In Europe overnight despite an economic confidence reading which increased by more than forecast in December, disappointing retail sales as well as the unemployment rate which rose to a record 11.8% in November have both elevated the level of uncertainty surrounding the shared bloc which continues to be tainted by its second recession in four years. Touching lows of 1.3055 against the Greenback the Euro opens lower this morning at 1.3082. Looking ahead this week the European Central Bank and the Bank of England are expected to meet on Thursday to discuss whether their respective Monetary Policy settings are appropriate.

Data releases

AUD:
HIA New Home Sales m/m, Retail Sales m/m

NZD: Building Consents m/m

JPY:
No data today

GBP: Trade Balance

EUR:
German Industrial Production m/m

USD:
10-yr Bond Auction