Australian Dollar
The Australian economy lost 29,300 jobs in December, a report from the Australian Bureau of Statistics showed yesterday, as a strong Australian Dollar and growing economic concerns around the globe continue to hit the local economy. Although the rate of unemployment remained steady at 5.2%, this figure indicated a continuation in job losses that has averaged 7,000 per month in the final quarter of 2011. With these figures adding fuel to speculation of a further interest rate cut by the RBA in February, the Australian Dollar fell from earlier highs around 1.0430 to levels below 1.0380 before recovering to consolidate around the 1.0400 handle. Heading into the offshore session, better than expected demand for European government bonds helped offset fears of government default and bolstered sentiment, carrying the Aussie to 1.0430. Opening this morning at 1.0410, focus for the Aussie into the end of the week will be Chinese Flash Manufacturing PMI due out later today as well as ongoing talks in Greece this evening.

We expect a range today of 1.0370 – 1.0460

New Zealand Dollar
The New Zealand Dollar shed around 40 basis points yesterday after it was reported consumer prices fell by 0.3% in the final quarter of last year. Sinking from opening highs above 0.8070 the Kiwi soon found levels closer to 0.8020 as investors began to speculate lack of inflationary pressures in New Zealand would provide the central bank with further justification to loosen monetary policy. Trailing to a session low of 0.8010, improved sentiment surrounding the European Debt Crisis helped the Kiwi find support and limit downside movement in offshore trade. Remaining range-bound between 0.8000 and 0.8030 the local unit opens for the final day of the week at 0.8020. Despite weak unemployment figures from across the Tasman the New Zealand Dollar still opens this morning weaker against its Aussie counterpart at 1.2960 (0.7716).

We expect a range today of 0.7980 – 0.8080

Great British Pound
It was a quiet day in regards to the UK's economic calendar and thus the Great British Pound was forced to derive its value from international events. Trading in a quiet range during Asian hours, Sterling began to move higher as a switch to European trade brought improved risk sentiment following two successful bond auctions in Spain and France. With demand for the Greenback weakening, the Pound moved from earlier levels around 1.5430 to touch eventual highs close to 1.5490. Opening here this morning, investors will be keeping a close eye on Retail Sales figures due for release this evening as well as ongoing developments in its neighbouring continent. Despite improved risk sentiment, recent profit taking has seen the Pound recover from lows against the Australian and New Zealand Dollars, to 1.4860 and 1.9270 respectively.

We expect a range today of 1.4790 -1.4910

Majors
The Euro Dollar has reached it highest level in two weeks after Spain raised more than its maximum target at a long-term debt sale overnight. Moving from earlier levels around 1.2860 the Euro rallied decisively above 1.2900, also helped along by another bond auction in France, where the recently downgraded country successfully raised almost 9.5 billion euros. Across the pond, the US Dollar weakened against the majority of its major trading partners as risk sentiment improved following the two bond auctions in Europe, as well a drop in unemployment claims in the worlds largest economy. Rallying above 1.2950 the Euro sits this morning at fresh two-week highs of 1.2960 and the Greenback, despite a fall in the Dollar Index, has managed to gain ground against the Japanese Yen where it trades at 77.15.

Data releases

AUD:
Import Prices q/q

NZD: No Data Today

JPY:
All Industries Activity m/m

GBP: Retail Sales m/m

EUR:
German PPI m/m

USD:
Existing Home Sales