Australian Dollar:
The Aussie spent much of yesterday morning trading close to where it opened, as the lack of investors in the market kept ranges tight. At midday we got some movement though, as Chinese manufacturing PMI disappointed estimates somewhat coming in lower than expected at 50.9 versus 51.2. This was still a better number than the previous months 50.1 but given the low level of liquidity, it was enough to pull us back below 1.04 and break below the previous holiday range. As US markets opened those initial losses were reversed, as US manufacturing also fell, pushing down the greenback against most of its major counterparts and sending us back up towards 1.0430. With local investors returning from their long weekend, we should see the focus squarely on the RBA, but with next to no chance of a change in interest rates, the real focus will be the accompanying statement. Previous statements have maintained an easing bias, but many economists are now calling for a change in tune to a more neutral stance which could send the Aussie higher.

We expect a range today of 1.0375 – 1.0465

New Zealand Dollar:
We find the Kiwi slightly higher this morning at 0.8375, following some poor manufacturing out the US that saw the demand for the greenback fall and sent other currencies higher. Yesterday during local holiday trade the Kiwi came under minor selling pressure as Chinese data proved disappointing for the few investors watching the markets, and had us trading close to 0.8350. As liquidity returns over the next 24 hours we may manage to break free of recent ranges, but it will likely take the overnight session to achieve this, as the European equity markets begin processing developments that came out of Cyprus and Italy over the weekend. The back end of the week is set to be a busy one with BOJ, ECB, BoE and US employment all key events.

We expect a range today of 0.8340 – 0.8400

Great British Pound:
Last night the sterling managed to break free of its holiday trading range as demand for the greenback feel on some poor manufacturing data, while some poor Chinese data also saw some gains against the south pacific crosses. The pound rallied from just below 1.5200 to reach today’s open at 1.5235, which is close to highs seen at the beginning of last week, and sets it up well for the first trading day back since the long weekend. Tonight sees the release of local manufacturing PMI data which is expected to come in better than last month at 48.8. Meanwhile, with Euro also rallying against the USD, EUR/GBP remains flat at 0.8435 while GBP/AUD is at 1.4610 and GBP/NZD is at 1.8190.

We expect a range today of 1.4575 – 1.4650

Majors:
With much of the world still off for business yesterday, it was another mostly quiet day for markets up until the US open, and even then most action was centred on a small number of items. The Euro traded either side of 1.28 for most of the Asian, and what was left of the European trading day, but with the release of lower than expected US ISM Manufacturing data managed to work its way back above 1.2850. The gauge of US manufacturing still came in expansionary at 51.3, but was a sharp drop from last month’s figures of 54.2 and way below expectations of 54.0, which has some investors scaling back bets of when the Fed will begin reducing their asset purchases. The USD also fell against the Yen on the back of this and USD/JPY is currently near monthly lows at 93.35. The Yen had gained earlier, with the safe haven being sought as Japan’s Tankan index also disappointed and Chinese manufacturing also came in lower than forecast. Looking ahead, attention will likely be on Europe tonight with German inflation data and Eurozone unemployment the main focus, before attention turns to the BoJ and ECB later in the week.

Data releases:

AUD:
RBA rate decision, AiG Performance of manufacturing index

NZD ANZ commodity price

JPY:
Labor cash earnings

GBP Lloyds Business barometer, PMI manufacturing, Consumer net credit, Mortgage approvals

EUR:
German PMI, Eurozone unemployment rate, German CPI

USD:
Factory orders, Vehicle sales