Australian Dollar:
After a strong rally on Tuesday night, the Aussie had a fairly uneventful Asian session, trading just above 1.03 but not breaking higher than the previous night’s high. We mostly had tier 2 data released locally with home loans dropping 1.5% compared to expectations of a 0.5% gain but as previously stated Asian investors took little notice of this, instead holding steady until Europe and US took over. With US retail sales coming in better than expected; a resulting rally in the USD saw us give up 1.03. This combined with comments from China’s central bank governor that there is concern about inflation looks likely to keep a cap on the Aussie for the time being. Today the focus locally will be Australian employment data and if the pattern of alternating months of good and bad results continues we are due for a lower than expected reading.

We expect a range today of 1.0245 – 1.0325

New Zealand Dollar:
At the time of writing the RBNZ has just announced that rates will remain on hold as widely expected. The accompanying statement has already been broken down and chewed over by investors with the general dovish theme taking centre stage and sending the Kiwi below 0.82. Investors were looking for possible signs of a rate increase later in the year but Wheeler has instead stated that rates will remain on hold for the rest of 2013 and even suggested that a persistently high NZD may allow for a rate decrease at some point in the future. Wheeler also highlighted GDP as a concern, given current drought conditions across most of the North Island, and how that develops may see them leaning one way or the other. The NZD dropped a full cent against the greenback on this release but has since recovered back up towards 0.8185, while NZD/AUD has again been pushed below 0.80. With minimal data locally we will likely continue to trade RBNZ sentiment but Australian employment data may also cause some movement.

We expect a range today of 0.8135 – 0.8215

Great British Pound:
The pounds sharp fall has been halted for the time being as investors began to consider the recent falls may have been overdone and profit taking took hold. A fall in the Euro also provided support with EUR/GBP dropping back below 0.87 after a poor Eurozone industrial production reading. The cable initially reached above 1.4970 on flows out of the Euro but was sent lower on a strengthening greenback after their retail sales came in better than expected and we now find it trading at 1.4920. With some very poor data this week, the market will now turn to next week’s BoE minutes and the UK budget for what will likely be more signs of weakness. Meanwhile the pound is stronger against the Aussie (1.4490) and the Kiwi (1.8225).

We expect a range today of 1.4460 – 1.4525

Majors:
The theme of positive US data leading to a rising US Dollar continued overnight with US retail sales coming in better than expected and sending the greenback up against most of its major counterparts. The Asian session yesterday was very quiet with most currencies moving within small ranges, it was only as Europe opened that any kind of movement was seen. The Euro was again under pressure with industrial production falling 0.4% in January compared to expectations of only a 0.1% fall, while a bond auction in Italy also disappointed, sending the EUR/USD back below 1.3. Turning to the US, the highlight of the day was US retail sales which came in much better than expected up 1.1 for February versus expectations of only a 0.2% rise. This was the biggest increase in retail sales in five months and adds to recent improvements in employment and manufacturing but it still may be a bit early to start making assumptions on what the Fed will do. The dollar surged higher on the back of this with the Euro falling hardest reaching lows near 1.2930, meanwhile the dollar also picked up on ground earlier lost against the Yen which had strengthened on doubts over the election of one of the BOJ deputies.

Data releases:

AUD:
Employment change, Unemployment rate

NZD: RBNZ rate decision

JPY:
Industrial production, Machine tool orders

GBP: No data today

EUR:
ECB Monthly report, Eurozone employment

USD:
Producer Price Index, Initial jobless claims, Fed comprehensive capital analysis and review