Australian Dollar
The Australian Dollar rallied during local hours yesterday, as regional equity markets rallied an average of 1% across the board. Shrugging off a 1.2% decrease in the number of home loans approved during the month of January, the Aussie rallied from opening levels around the 1.0500 handle to oscillate either side of 1.0550 by mid-afternoon. Heading offshore it was unable to hold onto these levels and in some choppy trade it dipped as low as 1.0490 as encouraging retail sales and central bank statement from the United States bolstered the Greenback. Recovering this morning as markets digest how the improving US economy will boost overall economic conditions, the Aussie trades back near yesterday’s levels at 1.0530 ahead of Consumer Sentiment figures this morning.

We expect a range today of 1.0470 – 1.0570

New Zealand Dollar
The New Zealand Dollar has fallen victim to a strengthening Greenback overnight, retracing earlier gains to lows of 0.8190. Earlier in the day improving sentiment and stronger equity markets in Asia helped the Kiwi to levels above 0.8230 and despite last night’s moves, its resilience sees it open this morning again nearing 0.8230. On the Aussie cross the New Zealand Dollar has pushed ahead following disappointing home loans data across the Tasman, and they trade this morning at 1.2810 (0.7806). Absence of local data on the economic calendar today likely means the New Zealand Dollar will continue its direction according to the whim of risk sentiment.

We expect a range today of 0.8180 – 0.8260

Great British Pound
House prices in the United Kingdom are looking up according to the Department for Communities and Local Government, reporting a 0.7% increase in January and a 0.2% increase on prices this time last year. Sales also edged up in February as reported by the London based Royal Institution of Chartered Surveyors (RICS) and the price index reached a 19 month high. Sterling rallied 0.7% from earlier lows to highs near 1.5740, although a strengthening Greenback temporarily pushed Cable back below 1.5700. Opening this morning at 1.5705, Sterling looks ahead to this evening’s unemployment data, where surveys are predicting a 6,500 increase in unemployment-related benefits. On the antipodean cross rates the Pound is rather unchanged against the Australian Dollar at 1.4890 and marginally lower against the Kiwi at 1.9100.

We expect a range today of 1.4810 – 1.4960

Majors
The US Dollar rallied after the US Federal Reserve statement last night as central bank policy members decided to leave current monetary policy unchanged. They did however raise their assessment of the wellbeing of the local economy identifying an improving labour market and improving international conditions as key contributors. Strengthening by around 0.9% from earlier lows against the Euro Dollar, the Greenback touched levels around 1.3060 also helped along by a 1.1% increase in Retail Sales during the month of January. The Bank of Japan earlier had their central bank meeting where officials did take steps to further ease monetary policy for the exporting nation. With a high Yen still wreaking havoc for exporters, the central bank announced further loans totalling 0.5 trillion Yen to growth industries as well as 1 trillion Yen in US Dollar loans. The Japanese Yen subsequently fell from 82.00 to 82.70 against the Greenback and has toppled further to break the 83.00 mark for the first time since April 2011. Despite German economic sentiment hitting 21 month highs according to the monthly ZEW survey, the Euro opens near overnight lows this morning at 1.3070.

Data releases:

AUD: Westpac Consumer Sentiment

NZD: No data due for release

JPY: BSI Manufacturing Index; BOJ Monthly Report; Revised Industrial Production

GBP: Claimant Count Change; Unemployment Rate

EUR: CPI y/y; Industrial Production m/m

USD: Current Account; Import Prices m/m; Crude Oil Inventories