Australian Dollar:
The main focus for the Aussie yesterday was the inflation data with many hoping it would provide further guidance on the RBA’s likely moves over coming months. The figure did disappoint forecasts, coming in at 0.2% versus expectations of 0.4% which resulted in a trimmed mean of 0.6% versus 0.7% expected. While the figure was below the average forecast it was still within an overall forecast range with some tipping that the trimmed mean would have fallen to 0.5, this hasn’t done much to change expectations for the next RBA meeting with the chance of a rate cut still just below 50%. During our session this saw the Aussie initially fall against most of its major counterparts but with the figure still within forecast range there was still plenty of support on the downside just above 1.0530. Offshore the AUD has recovered back up to 1.0550 after the US House of Reps approved a temporary suspension of the debt ceiling, however markets remain heavy after IMF dropped their growth forecasts which means today is shaping up for a day of tight ranges especially given there is little in the way of local data.

We expect a range today of 1.0530 – 1.0575

New Zealand Dollar:
A quiet day for the NZD has seen us held within a fairly tight range; we did see some weakness in the Kiwi yesterday afternoon after funds began flowing back into a strengthening Yen as markets continued profit taking after the BOJ earlier in the week. Strong support was seen just above 0.84 though, and from here a rally back up towards 0.8440 was driven by news of a vote in the US congress to temporarily suspend the debt ceiling. These gains were muted though as the IMF released a report which lowered their forecasts for the global economy from 3.6% to 3.5% for the year. We now find the Kiwi basically right in the middle of the recent range at 0.8420 against its US counterpart and with the Dow closing at its highest level since 2007 we look likely to remain above 0.84 in the short term. This morning sees the release of manufacturing sentiment data and credit card spending locally which may provide some direction for investors before PMI data out of Europe tonight.

We expect a range today of 0.8400 – 0.8475

Great British Pound:
We find the pound stronger this morning after an active session overnight saw two key releases in employment data and the Bank of England minutes while markets were also tuned into a speech from David Cameron announcing plans for a referendum in 2017 on the UK remaining in the EU. The cable reached highs over 1.0580 after unemployment fell to 7.7%, the lowest level since early 2011 and the jobless claims fell by 12.1K compared to expectations of a 0.5K gain. The rally in the GBP was slowed as the BOE minutes cited a strong pound as an obstacle to further growth while it was revealed that there was an 8-1 vote to keep asset purchases at current levels. Meanwhile David Cameron’s comments, while announcing a referendum, has left plenty of time and room for things to change before there is any real risk of the UK leaving the EU. This morning we find the pound off its overnight highs and is currently at 1.5840 against the USD while it is also flat against the Aussie (1.5020) and the Kiwi (1.8815)

We expect a range today of 1.4990– 1.5040

Majors:
The main news out this morning is that the US congress has voted to temporarily suspend the federal debt limit, the so-called debt-ceiling, until May 19. As long as it is passed by the Senate, it basically allows the government to continue to pay its bills and puts the debate off until this date, allowing politicians to instead focus on the spending cut issues which were put off from December. While it doesn’t fix the problem it does prevent February from becoming another huge ticking time bomb for multiple issues as the world economy sits and waits for politicians to act leading up to the last second. As news of the impending vote spread through the market, risk initially rallied pulling the Euro up to 1.3350 against its US counterpart; however with the IMF cutting growth forecasts for the world economy as a whole, most gains have been subdued. The IMF lowered their growth forecasts to 3.5% from 3.6% while also making particular note of the Eurozone which it believes will remain in a recession this year; contradicting previous forecasts from some Eurozone officials. These two counteracting factors sees the Euro fairly balanced and we find it this morning relatively unchanged from yesterday at 1.3320, while the Dollar has made back some previously lost ground against the Yen and we find it at 88.70.

Data releases:

AUD:
No data today

NZD:
Business performance of manufacturing, Credit card spending

JPY:
Stocks and bond buying, Merchandise trade balance, Small business confidence

GBP:
BBA loans for house purchases

EUR:
German PMI, Eurozone PMI,

USD:
Leading indicators, Prelim PMI, Initial jobless claims