Australian Dollar
The Reserve Bank of Australia released the minutes of is April monetary policy meeting yesterday and as markets predicted the overall tone was on the dovish side. Highlighting slower output growth to be a factor domestically, as well as vulnerable global economic growth, the board decided it needed to await next week’s quarterly CPI figures before making a decision on further rate cuts. Dipping from earlier levels near 1.0350, the Australian Dollar found intra-day support at 1.0310 before a switch to offshore trade lead to a turnaround in risk appetite. With the economic situation looking up in Europe, a rise in the global growth forecast by the IMF and US housing data beating expectations, the risk-sensitive Aussie rallied impressively through 1.0400 before consolidating to open Wednesday trade at 1.0390. A quiet twenty-four hours ahead on the economic calendar will likely leave investors watching Europe quite closely as well as taking direction from global equity markets.

We expect a range today of 1.0360 – 1.0450

New Zealand Dollar
The New Zealand Dollar fell from morning highs yesterday, losing 0.6% throughout the course of the local session. Speculation across the Tasman of a potential RBA rate cut next month and close ties between the two countries, left New Zealand’s economy and interest rate under scrutiny as well. Lows of 0.8150 were quickly recovered from as a move to offshore trade brought with it an upgrade of global growth outlook from the IMF and a turnaround in risk sentiment. Rising back to 0.8230 the Kiwi opens near these highs against the Greenback at 0.8215, yet despite RBA rumours the local unit is lower against its Aussie rival at just above 0.7900.

We expect a range today of 0.8180 – 0.8250

Great British Pound
Inflation in the United Kingdom was relatively flat in March, moving back up by 0.1% to 3.5% from the month prior. Still, Sterling was given a lift by the data which seemingly refuses to fall back towards the Bank of England’s 2% target. Combined with strong demand for Spanish debt on the mainland, sentiment for Cable improved and the pair lifted to intra-day highs of 1.5960. Unable to sustain the full benefit of its earlier rally, Sterling fell back to open this morning at 1.5920 ahead of unemployment data this evening as well as the release of the monthly Monetary Policy Committee meeting minutes. The British Pound also staged a rally against its Australian counterpart earlier in the day, however highs above 1.5400 proved too much to handle and the GBP/AUD currently sits lower at 1.5320. A similar trend against the New Zealand dollar sees the pair trade this morning at 1.9385 after touching earlier highs of 1.9500.

We expect a range today of 1.5270 – 1.5390

Majors
 : In the latest chapter of the European debt crisis a firm demand for an auction of Spanish Government bills overnight greatly reduced investor anxiety and once again helped stir up positive risk sentiment in global financial markets. Fresh economic data out of Germany also supported risk appetite as the ZEW index posted a much stronger reading for April, 23.4 actual vs. 19.7 consensus, demonstrating an optimism in the German, and wider euro-zone, economy’s. With a generally positive round of US earnings reports trickling through too, the mood in equity markets, particularly those in the US, turned positive helping bullish investor sentiment flourish. The knock-on effect in to currency markets saw EURUSD relatively unchanged across the day, moving between 1.3100 and 1.3180, whilst the greenback made up recent losses against the yen, USDJPY pushing higher towards 81.00. Looking to be a quiet day ahead Euro trades this morning at 1.3130 and the Greenback buys 80.95 Yen.

Data releases:

AUD: MI Leading Index m/m

NZD: No data due for release

JPY: No data due for release

GBP: Claimant Count Change; MPC Meeting Minutes; Unemployment Rate

EUR: Current Account

USD: Crude Oil Inventories