Australian Dollar
The Australian Dollar has failed to break out of recent ranges, despite a volatile session overnight concerning European bond yields and lacklustre US equity markets. Earlier in the day, during the local session, the Aussie fell back from morning highs near 1.0380 on a reported decrease in business confidence according to the quarterly survey released by National Australia Bank. Holding above support at 1.0350, flat Asian equity markets provided little direction for the Aussie and it wasn’t until a successful Spanish bond auction that it managed to retest daily highs. Unfortunately concern in Europe shifted from Spain to France and a basket of weak US fundamentals denied the risk-sensitive Aussie any further upward momentum. Falling back we open this morning just off overnight lows of 1.0320. Import prices for the first quarter of 2012 are due to be announced later this morning, although risk sentiment is likely to be the main driving force of the Aussie into the weekend.

We expect a range today of 1.0280 – 1.0360

New Zealand Dollar
The New Zealand dollar lost ground against the greenback over night, touching 81.18 levels. With global equity markets taking a knock from poor US data, and continued market tension concerning European governmental debt the cross effect in to other asset classes helped stifle any upside move for the kiwi, which also banked slightly against the euro, pound and Australian dollar. The weekend will prove topical for the investment community as the Group of 20 nations, International Monetary Fund, and World Bank all meet in Washington DC, providing some insight into how policymakers plan to deal with Europe''s debt crisis. With little fresh data out of New Zealand, the fate of kiwi is likely to remain tied to investor risk appetite and events unfolding in Europe. AUDNZD is currently close to 1.2690.

We expect a range today of 0.8120 – 0.8200

Great British Pound
With no new data forthcoming from the UK on Thursday, it should have been a quiet and uneventful day of trading for sterling. However coming into the Asian session, GBPUSD finally pushed through resistance at the 1.60 level, where it has stayed for the past 24hrs trading albeit in a choppy range between 1.6020 and 1.6070. It is a little early to tell where Cable will go from here; the 1.60 level was tested at the beginning of the month and immediately bounced back below 1.59. Considering yesterday brought a string of weaker than expected US data releases, investor appetite for the pound could be firmer this time around. Data which could help sterling’s cause today will be UK Retail Sales figures for April (1930, AEST): a number above market consensus at 0.4% could have a supporting effect in the pound. Closer to home sterling strength helped push GBPAUD through the 1.55 mark: GBPAUD is currently trading close to 1.5535.

We expect a range today of 1.5470 – 1.5600

Majors
Strong demand for Spanish bonds failed to set the groundwork for a risk rally last night as a widening of the premium on French over German 10-year bonds drew focus away to another area of the euro-zone. Although Spanish 10-year yields rose to higher than that of their previous auction, they remained below 6% at 5.86% relieving concern of unsustainable borrowing costs. The euro pushed back to 1.3150 on these results before sinking soon after towards 1.3070 as concerns shifted to France and the relative increase of bond yields to that of Germany. Macroeconomic data from the US added to the volatility of the overnight session, namely a 386,000 increase in unemployment claims as well as a drop in existing home sales and the Philly Fed manufacturing index. The US dollar came under resultant pressure and this morning trades against the Euro at 1.3135 whilst still managing to gain overall ground against the Japanese yen. Downward pressure still remains with the Yen ahead of its central bank meeting towards the end of the month and the pair sit currently at 81.60. Looking ahead into the weekend, German Ifo business climate is due for release as well as scheduled meetings of the G20 and IMF.

Data releases:

AUD: Import Prices q/q

NZD: No data due for release

JPY: Tertiary Industry Activity m/m

GBP: Retail Sales m/m

EUR: German Ifo Business Climate; German PPI m/m

USD: No data due for release