Australian Dollar
The Australian Dollar gapped immediately lower yesterday morning as local traders corrected their positions following a string of credit downgrades out of Europe of Friday. Despite a local report which showed home loans rose in November by a greater than forecasted amount the Australian dollar was sold to reach a mid afternoon low of 1.0253 against its US Counterpart. With the US being closed as a result of a public holiday the Australian Currency did manage to pare back some of its earlier losses as it opens this morning at a very similar level to where it was yesterday at a rate of 1.0315. Looking ahead this week, unemployment figures due for release Thursday are the highlight of the Calender, with a positive reading potentially providing some further support around the 1.03 level

We expect a range today of 1.0240 - 1.0340

New Zealand Dollar
In what was a very uneventful day of trading for the New Zealand dollar, markets remained relatively subdued yesterday with the US enjoying a public holiday. With little in the form of local data to provide any real direction for the Kiwi, local equities lost around half-cent as investors digested the fall out of a handful of European credit – downgrades overnight Friday. Despite some ongoing speculation of further downgrades, the Kiwi maintained its tight trading range drifting between a rate of (0.7910 – 0.7965) against its US Counterpart. Whilst the New Zealand dollar appears well capped below the psychological 80 US Cents level in the medium it has certainly been one of the better performed currencies, appreciating over 5 percent against the Greenback over the past 4 weeks. Meanwhile this morning the New Zealand dollar opens stronger against its US Counterpart currently buying 79.42 US Cents.

We expect a range today of 0.7880 – 0.7980

Great British Pound
In data released yesterday U.K home sellers cut asking prices for a third straight month in January according to Rightmove Plc. With average property prices in England and Wales falling 0.8 percent from December it’s likely the property market will continue to face some very strong challenges in 2011. Despite the soft data the Great British Pound managed to advance against its US Counterpart and after falling to an earlier low of 1.5274, rebounded well to open this morning around half a cent stronger, currently swapping hands at a rate of 1.5320. In what was an overall flat session for UK markets the FTSE gained around 0.2 percent as US Markets enjoyed a long weekend. Meanwhile on the cross-rates this morning the Sterling opens unchanged against the Kiwi (1.9281) however slightly stronger against the Aussie (1.4860)

We expect a range today of 1.4820-1.4920

Majors
It was again news flows out of Europe driving currency direction overnight as US Markets were closed given the Martin Luther King Public Holiday. In a further blow to Policy Makers who are trying desperately to ensure confidence throughout the region is restored ratings Agency Standard & Poors downgraded the creditworthiness of the Euro-Zone’s bailout fund by one notch to AA+. Following on from the downgrades of nine European nations on Friday including Austria and France such ratings cuts could potentially hurt the European Financial Stability Facility’s ability to raise cheap bailout money. Following the announcement the EURO was sold to an overnight low of 1.2625 against tis US Counterpart before recovering well to open this morning around 30 basis points higher at a rate of 1.2663. Helping the 17-nation currency recover some of the ground lost earlier, French borrowing costs surprisingly fell overnight in a successful bond auction which saw yields on one-year notes fall from 0.454 to 0.406 percent. Meanwhile in the US overnight the Greenback lost some mild ground against a handful of currencies including the Japanese Yen as it opens weaker this morning at a rate of 76.743.

Data releases

AUD:
No Data Today

NZD: REINZ HPI m/m, NZIER Business Confidence

JPY:
Tertiary Industry Activity m/m

GBP: Nationwide Consumer Confidence, CPI y/y, RPI y/y, DCLG HPI y/y, BOE Gov King Speaks, CB leading Index m/m

EUR:
CPI y/y, ZEW Economic Statement, ZEW Economic Statement

USD:
Empire State Manufacturing Index