Australian Dollar
The Australian Dollar rallied during local trade yesterday, moving from opening levels around 1.0680 to 1.0740 by the switch to London hours. Boosting demand for our local unit was a late night vote in Greece which resulted in the passing of austerity measures aimed at reducing the indebted nation’s budget deficit. The ensuing risk rally carried the Aussie higher alongside local sentiment following a reported 2.3% increase in home loan approvals for the month of December. Momentum took the AUD to eventual highs around 1.0770 before some mild profit-taking and apprehension ahead of tomorrow’s vote on Greece’s aid package saw its value consolidate around 1.0740. Locally today, the markets will look towards NAB Business Confidence due for release this morning.

We expect a range today of 1.0680 – 1.0760

New Zealand Dollar
A notable improvement in risk sentiment carried the New Zealand Dollar higher during the Asian session yesterday; the passing of Greek austerity measures taking the indebted nation one step closer to receiving its next bailout package. Pushing higher from opening levels of 0.8280, highs above 0.8330 were achieved before trade moved offshore for the evening. Positive sentiment continued through our European hours, and along with a rally in equity prices, this sent the Kiwi to session highs of 0.8370 before falling back to open today at 0.8340. Against the Australian Dollar, the local unit has moved slowly yet surely higher to 0.7775 as of this morning’s open. The national Food Price Index is due for release this morning, although investor sentiment is likely to remain the main driver for the Kiwi at this stage.

We expect a range today of 0.8290 – 0.8390

Great British Pound
Sterling rose for the first time in four days yesterday, gaining ground against the greenback after the Confederation of British Industry said the UK will avoid a technical recession this year. Such a statement alleviated concerns of further quantitative easing which would in turn work to dilute the value of the underlying currency. Rallying to highs round 1.5820, Sterling then pared some of these gains as the concurrent risk rally lost steam, seeing Cable open this morning at 1.5770. With higher- yielding currencies the biggest winners overnight the Pound has slipped from this time yesterday against the Australian and New Zealand Dollars, trading at 1.4685 and 1.8900 respectively.

We expect a range today of 1.4650 – 1.4780

Majors
The Dollar and Yen slipped against their higher-yielding counterparts yesterday, with the euro pushing back towards Friday’s highs after Greek Prime Minister Lucas Papademos won parliamentary approval for a series of austerity measures required to receive the country’s next tranche of bailout funds. The Euro rallied to 1.3280 against the Greenback and 103.15 against the Yen; however it proved nervous at these levels considering euro-area finance ministers still need to approve the release of funds when they meet on February 15. Paring gains throughout the North American session the single currency trades back around 1.3190 US Dollars and 102.35 Japanese Yen. Ahead today, Bank of Japan officials begin their monthly monetary policy meeting, to which the high value of the Yen is more than likely a scheduled topic. With the threat of a possible intervention in the back of investor minds, the Yen will face some additional downward pressure alongside the seemingly buoyant risk sentiment of late.

Data releases:

AUD: NAB Business Confidence

NZD: FPI m/m

JPY: Monetary Policy Statement; Overnight Call Rate; Revised Industrial Production m/m

GBP: CPI y/y; RPI y/y

EUR: French Prelim Non-Farm Payrolls q/q; German ZEW Economic Sentiment; Industrial Production m/m

USD: Core Retail Sales m/m; Import Prices m/m; Business Inventories m/m