Australian Dollar

Retails Sales in Australia posted their weakest annual growth in 27 years with Annual Sales growing by a mere 2.4 percent in a report released by the ABS yesterday. In the crucial month of December Sales posted a surprise fall of 0.1 percent which saw the Australian Dollar sold for much of the intraday session trading to a 24-hour low of 1.0682 against its US Counterpart. Despite the weak reading the RBA is due meet today where its widely expected they will reduce the benchmark cash rate by 25 basis points from its current level 4.25 percent. Opening this morning lower against the Greenback at a rate of 1.0729, trading ranges are likely to remain choppy given the high chance that a rate cut has already been priced in to the Australian Dollar’s current price.

We expect a range today of 1.0650 – 1.0790

New Zealand Dollar
The New Zealand Dollar traded sideways for much of yesterday and despite the positive employment reading bolstering demand for the kiwi overnight Friday, it has struggled to advance from its five-month high against its US Counterpart around the 83.50 US Cents Level. With New Zealand Markets closed yesterday the Kiwi lost half a cent over the course of the local session drifting to an eventual low of 0.8285. Concerns that Greece’s political leaders will fail to reach an agreement on a 130 billion EURO bailout has plagued global risk-sentiment over the course of the last 3 days with sentiment deteriorating as talks drag on. Meanwhile this morning despite the significant headwinds coming out of Europe the Kiwi opens only marginally lower against its US Counterpart currently swapping hands a rate of 0.8336.

We expect a range today of 0.8250 – 0.8380

Great British Pound
UK Stocks dropped yesterday with the FTSE losing 0.2 percent, snapping a four day rally. All eyes have been on Greece over the past 24 hours with European Leaders becomingly increasingly frustrated at the delays in reaching an agreement to the conditions of a bailout. Despite concerns continuing to mount surrounding the euro-area fiscal crisis the Sterling did manage to find some minor support locally yesterday with house prices in January increasing by 0.6 precent, beating expectation. After earlier trading as low as 1.5739 against its US Counterpart the Sterling did find some upward support reaching an eventual high of 1.5840. Meanwhile this morning the Great British Pound opens stronger against both the Australian Dollar (1.4747) and New Zealand Dollar (1.8973)

We expect a range today of 1.4680 – 1.4810

Majors
Following a five week advance for the S&P 500 Index, US Stocks dropped yesterday amid ongoing concerns that Europe’s debt crisis is set to again worsen. In what is turning into a very long-winded process German Chancellor Angela Merkel voiced publicly her concerns over Greece, emphasising the fact that time is now running out to find a solution. With political leaders set to resume meetings this evening significant downside for the 17- Nation Euro remains a distinct possibility should leaders fail to meet the conditions of a 130 billion-euro bailout. Still in Europe, German Factory orders for the month of January surprised on the upside growing by 1.7 percent helping the EURO reach an overnight high of 1.3140 against its US Counterpart, opening this morning at a rate of 1.3125. In what is shaping up as an eventful evening, whilst Greek talks are likely to dominate risk flows US Fed Reserve Chairman Ben Bernanke is due to testify on the economic outlook and federal budget situation before the Senate tonight with traders keen to see whether the central banks bearish stance will remain. Meanwhile this morning there has been a slight move back into the Greenback with the US Currency opening stronger against the Japanese Yen this morning at a rate of 76.559.

Data releases

AUD:
AIG Construction Index, Cash Rate, RBA Rate Statement

NZD: Labor Cost Index q/q

JPY:
Leading Indicators

GBP: BRC Retail Sales Monitor y/y

EUR:
German Industrial Production m/m

USD:
Fed Chairman Bernanke Testifies, IBD/TIPP Economic Optimism, Consumer Credit m/m