Australian Dollar
Interest rate differentials remained supportive of the Australian Dollar on Friday as investors continued to snap up the Australian Dollar in lieu of the Greenback, which the Fed has said will offer benchmark low interest rates through to 2014. What was a relatively quiet session in Asian hours, ongoing Chinese New Year holidays kept movements limited and the Aussie bounced between 1.0590 and 1.0630. Heading offshore, speculation Greece is close to a deal with its private sector creditors lifted sentiment, and combined with positive fundamental releases from the United States the Aussie rallied to eventual highs above 1.0660. Opening this morning near 1.0650, an absence of local data releases will direct market attention to continuing developments offshore.

We expect a range today of 1.0600 – 1.0690

New Zealand Dollar
The New Zealand Dollar gained an impressive 2.3% against the Greenback last week, reaching its highest level since September on Friday. a pledge buy the US central bank to keep the door open to further quantitative easing weakened the Greenback along with speculation Greece is close to a deal with its private sector creditors. Hitting levels above 0.8240 the Kiwi opens here this morning ahead of what we expect to be a quiet local session as focus remains on offshore developments in Europe and the United States. An impressive trade surplus for the month of December pushed the Kiwi higher against its Australian counterpart early on Friday morning, pushing to highs above 0.7740 before settling to open today at this level.

We expect a range today of 0.8190 – 0.8260

Great British Pound
The Pound Sterling pushed to new monthly highs against the Greenback on Friday as risk sentiment dampened demand for the world’s reserve currency. As an absence of local data failed to move the Pound on a domestic front, Cable moved higher as markets focused on European developments. With Greece close to a deal with its bond-holders, Cable pushed above 1.5700 and despite a brief setback to 1.5650, this sentiment along with encouraging US economic data sent the pair to highs above 1.5730. Opening this morning near these highs, Sterling is at similar levels to this time on Friday against the Australian Dollar trading at 1.4775. A better than expected Trade balance in New Zealand however has seen the Pound move lower against the Kiwi on Friday, opening this week at 1.9085.

We expect a range today of 1.5670 – 1.5760

Majors
The Euro gained in value for the fifth straight day on Friday, despite a Fitch Ratings Agency downgrade of both Italy and Spain. After starting the day trading on the 1.3100 handle it remained in the same range until the switch into local hours where it rallied higher after European Union officials claimed to be close to a deal with Greece’s creditors. As this deal is the condition that must be met in order for Greece to receive its next tranche of bailout funds, markets have understandably welcomed the news favourably. Lessening demand for safe-haven assets saw the Euro rally to 1.3160 and after the markets failed to react to the ratings downgrade of Italy and Spain, the Euro continued to seven week highs above 1.3200. It was during the New York session that US fundamentals helped risk sentiment, namingly US Consumer Confidence levels, which posted its highest reading in almost a year. in addition, US Gross Domestic Product came in at 2.8% for the final quarter of 2011 and although this was below economists’ average expectations at 3.0%, it was a full percentage point higher than the previous quarter. These encouraging statistics was not enough to keep the USD above 77.00 Japanese Yen however, with the pair moving back to familiar ranges around 76.65, where it opens this morning.

Data releases:

AUD: No data due for release

NZD: No data due for release

JPY: No data due for release

GBP: No data due for release

EUR: German Prelim CPI m/m

USD: Core PCE Price Index m/m; Personal Spending m/m