Australian Dollar: The Australian dollar is struggling to hold its own above 96 cents of late as economic headlines are dominated by risk. Given a momentary boost by an increase in Building Approvals last month daily highs of 0.9650 were reached before the Aussie was pushed back down by talk of rate hikes once again in China and its susceptibility to risk. In addition, a 3.4% drop in Chinese stocks helped the Australian dollar reach lows overnight just below 0.9550. With European debt still the main concern, some positive US data and talk of furthering tax cuts caused a bit of a risk tug-of-war and hence the AUD ensued in some volatile trade to open today with a fall back to 0.9580. Australian GDP figures are expected later today, as well as Manufacturing PMI out of China, so we expect the current volatility to continue.

We expect a range today of 0.9530 - 0.9680

New Zealand Dollar: The Kiwi is being driven by offshore events at the moment and talks during Asia yesterday of China increasing interest rates and tightening bank funds caused a fall from opening highs near 0.7480 to test support at 0.7420. Heading into offshore trade back off these lows, choppy trade continued throughout the European and North American sessions with resistance set at 0.7460. A short-lived dip below 74 cents was observed however the New Zealand Dollar managed to bounce back from this to once again test resistance at 0.7460. Opening today somewhere in the middle we currently trade at 0.7420 and with lack of any significant local data it seems the pair will continue to be driven by risk sentiment in the short term at least. Relatively unchanged against the Australian dollar we currently trade just above 1.2900 with Aussie GDP figures potentially leading to some movement later this morning.

We expect a range today of 0.7350 - 0.7450

Great British Pound: With overall US Dollar strength and a decrease in local Consumer Confidence the Great British Pound has also lost ground however it has managed to find a degree of support from selling of the EUR/GBP cross rate. Asian trade saw Cable fall near 1.5520 and this momentum continued into London with the 1.55 barrier being taken out to test support at 1.5485. Improved sentiment in the US did help the Pound recover from these levels and a rally back through 1.5500 saw a high near 1.5600 before tapering off slightly to open today at 1.5560. With the Aussie and the Kiwi under pressure from European and Asian concerns Sterling has managed make some ground and opens back above 1.6200 this morning at 1.6230 against the Australian Dollar and at 2.0960 against the New Zealand Dollar.

We expect a range today of 1.6120 - 1.6250

Majors: The Euro dropped below 1.3000 for the first time since mid-August overnight and the Greenback has continued its gains across the board despite increasingly volatile trade. European debt concerns are still proving to be the overshadowing concern however positive data released from the US along with talk of Obama extending Bush-imposed tax cuts spurred a couple of timid risk rallies. The Chicago Purchase Manager's Index came in above expectations at 62.5 and is its highest reading since October 2005, as well as US consumer confidence being reported to be at its highest level in 5mths. These results saw the Euro push back from its lows to briefly test 1.3050 however risk aversion has prevailed and we open today back below 1.30 at 1.2980. The Japanese Yen in contrast has managed to reclaim some recent ground helped out by better than expected Industrial production as well as an increase in wage growth. Falling back through 84.00 USD/JPY now trades at 83.65 ahead of a big few days on the US data front.

Data releases

AUD: GDP q/q; AIG Manufacturing Index

NZD: ANZ Commodity Prices m/m

JPY: No Data Due Today

GBP: Nationwide HPI m/m; Manufacturing PMI

EUR: Final Manufacturing PMI

USD: ADP Non-Farm Employment Change; ISM Manufacturing PMI; Crude Oil Inventories

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