Australian Dollar:
Remaining firm up above the 1.0400 handle yesterday global risk sentiment received a boost following news that Cyprus had clinched a last-ditch deal with International lenders. Ensuring they receive 10 billion euro’s worth of bailout funding the plan to shut down the nation’s second largest bank whilst inflicting heavy losses on uninsured deposits has at least averted a full on banking system collapse. Rallying to an intra-day high of 1.0478 against its US Counterpart the Australian dollar still appears heavy when valued up above 1.0500 with investors generally reluctant to fully commit to a longer-term buying trend. Meanwhile this morning the higher yielding unit is stronger at a rate of 1.0462 with some of the earlier optimism surrounding Cyprus fading as the finer details of the package emerge.

We expect a range today of 1.0420 – 1.0490

New Zealand Dollar
Whilst the New Zealand dollar initially followed the Euro higher yesterday over the agreement on a financial rescue for Cyprus, the rally this morning appears to of overshot the mark as optimism turned to concern overnight. As details revealed bond-holders and uninsured depositors would be taking heavy losses to finance the bailout package, fears of contagion have once again surfaced given the danger that other nations may follow suit. Trading down from an earlier high of 0.8370 the New Zealand dollar opens in familiar territory this morning as it currently buys 83.53 US Cents. On the outlook today whilst European happenings are once again likely to garnish further attention ,investors will look towards local trade balance figures which are due to be released shortly in helping to determine short-term direction .

We expect a range today of 0.8320 – 0.8370

Great British Pound:
In an all too familiar story the Great British Pound has fallen against its US Counterpart overnight, dragged lower as a result of the political wrangling in Cyprus which has seen the Euro-Area’s third smallest economy avoid a disorderly default. Imposing losses that are estimated to be around 40 percent on uninsured deposits, fears that other nations may follow has weighed not only on the Sterling but almost every major currency pair overnight. Dropping to a low of 1.5141 against its US Counterpart the Sterling is weaker this morning against the Greenback (1.5141), the Aussie (1.4504) and the Kiwi 1.8162.

We expect a range today of 1.4470 – 1.4530

Majors:
In what was initially viewed as positive news across financial markets Cyprus accepted a last minute bailout from European creditors which ensures they receive 10 billion Euro’s worth of emergency funding. In a deal which involves taxing deposits over 100 000 euro’s whilst closing the nation’s second largest bank, overall the market’s initial optimism has turned out to be anything but a positive. With concerns over bondholder losses as well as the losses likely to be incurred by uninsured depositors, the fact that certain stakeholders have been forced into footing the bill has raised fears an ugly precedent may have been set, especially when other nations including Spain have already showed very real signs of stress throughout their banking system. Keeping in mind depositors in Italy and Spain may well be questioning their deposits in certain banks it’s anticipated that the highly negative European situation will weigh on the currency, at least over the coming weeks. Shedding more than a full US Cents the Euro is weaker this morning at a rate of 1.2855 against the Greenback. Further highlighting the slant away from risk the Japanese Yen is stronger whilst the USD/JPY cross is weaker at 94.143.

Data releases

AUD:
RBA Gov Stevens Speaks

NZD: Trade Balance

JPY:
CSPI y/y

GBP: Nationwide HPI m/m, CBI Realized Sales,

EUR:
Italian 10-y Bond Auction

USD:
Core Durable goods orders m/m, Durable goods orders m/m, CB Consumer Confidence, New Home Sales