Australian Dollar:
After opening yesterday looking strong above 1.03, the Aussie took a fall after the local retail sales number disappointed, initially sending us back to the minor support at 1.0280. The retail sales figure showed a fall of 0.4% in March after rising 1.3% in February. This was lower than the expected 0.1% gain and convinced some of the fence sitters that the RBA will make a move to cut today. This has been one of the most anticipated RBA announcements this year, as economists seem to be somewhat split as to how the central bank will act, many see this as a prime opportunity to cut given recent inflation and employment results, while others are suggesting the central bank will wait until next month after they have had the opportunity to review the capital expenditure numbers and another month’s employment figures. If they do remain on hold, then the accompanying statement will be analysed closely and may still provide some downside on the Aussie. Meanwhile this morning we open at 1.0250 after offshore traders dragged the Aussie down further in preparation for today’s announcement.

We expect a range today of 1.0180– 1.0310

New Zealand Dollar:
The Kiwi continued Friday night’s theme of risk strength during early trade yesterday, moving back up to 0.8550 around mid-afternoon. Any gains beyond this level were somewhat limited though as risk appetite waned and the Kiwi followed the Aussie and Euro lower against the greenback eventually finding support just below 0.85. Growth concerns in Europe combined with the chance of a further rate cut in the shared currency region saw a mixed day for equities globally and this weighed on our currency. Locally today we have some tier two data in hourly earnings and labour cost data but the main movement should be seen from the across the Tasman in the RBA rate announcement, with any cut likely to see AUD/NZD finally give up the 1.2000 level. Any falls in the Aussie could see a stronger Kiwi, even against the greenback, as relative yields between the two currencies come in, but with economists still split it is a hard one to call.

We expect a range today of 0.8475 – 0.8535

Great British Pound:
The pound has come off slightly from yesterday after a quiet local session with the nation closed for a bank holiday. The pound, like most currencies, drifted lower on Monday as it is consolidated gains made Friday night after the US employment data. Equities were mixed in Europe and the US, while comments from the head of the ECB that further rate cuts are possible saw EUR/GBP fall towards 0.8415. Meanwhile GBP/USD opens this morning trading sideways at 1.5540 while the pound is relatively unchanged against both the Aussie (1.5165) and the Kiwi (1.8250).

We expect a range today of 1.5130– 1.5220

Majors:
With no US data and a fairly quiet Asian session, the market had little direction to go by other than some minor happenings in Europe. Eurozone PMI composite was revised higher to 46.9, retail sales were down 2.4%, while Sentix investor confidence rose from -17.3 to -15.6 in April. Still this data did little to move the shared currency as it held above 1.31 for most of European trade. We did get some movement however, as Draghi, the head of the ECB, reiterated that the central bank was prepared to ease further should more weakness be seen in the core European economies. This saw the Euro give up the 1.31 level against the greenback just before the US session, as it headed towards 1.3060, before recovering somewhat back up to this morning’s open of 1.3075. With little data or announcements out of the US, currencies remained fairly range bound for much of the US session, while equities were mixed with S&P 500 finishing higher while the Dow gave up ground. USD/JPY remains quite strong, still trading on the strong unemployment numbers from Friday night, but the key 100 level still looks a long way off and we open this morning at 99.35.

Data releases:

AUD:
RBA rate decision, Trade balance, House price index, AiG Performance of construction

NZD Average hourly earnings, Private wages, Labour cost private sector

JPY:
No data data

GBP BRC shop price, Lloyds employment confidence

EUR:
German factory orders

USD:
Consumer credit, JOLTs job openings, Economic optimism