Australian Dollar
A turn around in global risk sentiment pushed the Australian dollar higher on Friday after testing support at 1.0310 during its local session. The Aussie lost around 30 points when import prices were announced to have fallen by 1.2% in the first quarter of 2012, a result which the high Australian Dollar would have played a part in. Moving offshore a turnaround in risk sentiment lifted the Aussie, stemming from improved conditions for German businesses, a boost in the firepower of the IMF and a strong set of earnings results from some key US corporations. Capped for now at 1.0380, the local dollar has slipped slightly to open Monday morning just off 1.0370. Looking ahead this week, CPI figures tomorrow hold a significant pull over the Aussie dollar and in advance of this, local PPI and Chinese manufacturing PMI could provide some direction for today’s session.

We expect a range today of 1.0340 – 1.0420

New Zealand Dollar
The New Zealand Dollar gained on Friday as markets reacted positively to an increase in the funding power of the IMF should the euro-zone require further assistance. In a day lacking local news, it wasn’t until London hours that the Kiwi broke free of its previous range and helped along by a rally in US equity markets, it touched highs around 0.8180 by the close of trade. Opening lower this morning, the Kiwi trades tentatively at these levels as investors begin to speculate its recent highs will reduce the likelihood of a RBNZ rate increase this year; the next policy meeting scheduled to take place on Thursday. As Friday held little regional data, the AUD/NZD trades marginally lower this Monday morning at 1.2680 (0.7886) following a decrease in import prices across the Tasman.

We expect a range today of 0.8140 – 0.8210

Great British Pound
Sterling continued its move higher on Friday, further solidifying its break through 1.6000 and moving towards October highs above 1.6150. Critical to the direction of the Pound was retail sales figures released on Friday and 1.8% increase in comparison to the expected 0.4% more than appeased the markets. Breaking higher to 1.6140 the move was also helped along by a rally in US equities markets, supporting risk sentiment and keeping the Greenback subdued. Retail sales also catapulted the Pound to its highest level this year against the Australian Dollar and the highest level since early January against the Kiwi. This morning’s open sees these levels slip slightly with Cable at 1.6120, GBP/AUD at 1.5550 and GBP/NZD trading at 1.9720.

We expect a range today of 1.5480 – 1.5610

Majors
The euro has rallied to its highest level against the Greenback since April 4 as a rally in world equity markets aligned with easing fears for the euro-zone to boost risk sentiment. Early on in the European session the single currency broke free of its earlier range when it was revealed the business climate in Germany had unexpectedly increased to nine month highs. Posting an index of 109.9 the Ifo survey moved the euro 30 points higher to 1.3170 and later, when a joint statement from the G20 finance ministers and the International Monetary Fund (IMF) announced an additional $430 billion to protect against the European debt crisis, the Euro rallied through resistance at 1.3200 to 1.3220. Corporate profits in the US also stole the spotlight for part of the day as General Electric, McDonald’s and Microsoft all produced impressive earning reports. The S&P 500 broke two weeks of losses and despite a pullback before close of markets, still finished the week in the black. The EUR/USD breaks lower on open this morning and trades at 1.3190; the USD JPY remains above 81.55 as investors trade tentatively ahead of the Bank of Japan’s policy meeting later this week. Focus for today likely will sit with outlook for global growth as China release monthly manufacturing figures later today.

Data releases:

AUD: PPI q/q

NZD: No data due for release

JPY: No data due for release

GBP: No data due for release

EUR: German/French/EZ Flash Manufacturing PMI ; German/French/EZ Flash Services PMI

USD: No data due for release