Australian Dollar:
The story for most of last week was the Aussies continued weakness against a strengthening Greenback as our move below parity was extended pushing us close to 0.9715 on Friday night. Some better than expected US data saw us break to near 11 month lows against the Greenback despite finding support around 0.9730 during Asian trade on Friday. It was a mostly quiet day for us locally on Friday with very little data to offer direction, but weakness set up earlier in the week in the Federal Budget and accompanying economic outlook continued to weigh on the Aussie. The Aussies relative weakness has also been seen on the cross rates as AUD/EUR has fallen below 0.76 for the first time since February despite recent falls in the Euro. This week looks to be a little busier than last week data wise with RBA minutes tomorrow, consumer sentiment on Wednesday and China PMI data on Thursday, while offshore data in the form of FOMC minutes and comments from Bernanke could spell continued Greenback strength. We open this morning slightly stronger against the USD as we have moved back to where we left it on Friday at 0.9745.

We expect a range today of 0.9705 – 0.9790

New Zealand Dollar:
The Kiwi has continued to move lower against its US counterpart, reaching a 6 month low on Friday night, as US consumer sentiment rose more than expected, furthering the case for the US central bank to begin winding down their current easing cycle. Despite strengthening on Thursday after positive signs were seen from the local budget, the continued strength of the Greenback has seen us approach levels not seen since November last year. The focus this week will be local inflation expectations tomorrow before the FOMC minutes and a speech from Bernanke on Wednesday night may set us up to target the key psychological 0.80 level against our US counterpart. This morning we open marginally higher from Friday’s lows at 0.8090, while falls against the Aussie has seen that cross rate move back above 1.2040.

We expect a range today of 0.8045– 0.8120

Great British Pound:
Despite starting last week just below 1.54 and then seeing some positive local data releases, the pound spent much of the week falling against a fast moving Greenback. Some better than expected employment numbers and a revision in growth figures last Wednesday from the Bank of England weren’t enough to prevent the pound falling to six week lows on Friday against the US currency as expectations of a reduction in the monthly bond purchases by the Fed were bolstered by some better than expected US data. The cable finished the week at 1.5180, which is close to where we find it this morning, while this week sees Bank of England minutes and inflation figures locally but we may continue to find most of our direction dictated by US happenings. Meanwhile pound is flat against both the Aussie (1.5585) and the Kiwi (1.8780)

We expect a range today of 1.5525 – 1.5630

Majors:
The Greenback continued its recent gains on Friday, following some better than expected data out of the US that further suggests the potential of an early end to the Fed’s current easing policies. University of Michigan consumer sentiment index increased to 83.7 for May, which was much higher than last month’s figures of 76.4 and well above market expectations of 77.9. These figures, which are at a five year high, were also combined with strong leading indicator numbers which came in at 0.6% and continues to paint the picture of an improving US economy. Despite some poorer figures during the middle of last week, the Greenback has been moving from strength to strength, particularly against the commodity currencies, with recent comments from the San Francisco Fed member that the US central bank may wind back some of their current bond purchases as early as the end of this summer. For most investors, this may seem a little ambitious but it would have many considering the potential for a change earlier than they may have originally forecast. This sets up the FOMC minutes and a speech from Bernanke on Wednesday as key events this week, and should set the tone for further USD direction. USD/JPY continued to move higher on Friday, breaking above 103 for the first time since October 2008 but it has since pulled back off those highs to where we open at 102.25 this morning. Meanwhile the Euro was also weakened on Friday by trade balance figures out of Spain which showed a sharp falls in imports, while political unrest in Italy also hurt the shared currency. We fine EUR/USD this morning at 1.2845.

Data releases:

AUD:
No data today

NZD Performance services index

JPY:
Cabinet office monthly economic report, Tokyo condominium sales, Leading index, Machine tool orders

GBP Rightmove house prices

EUR:
No data today

USD:
Chicago Fed Nat activity index, Fed’s Evans speaks