Australian Dollar
Whilst troubles in Europe continued to escalate overnight the Australian dollar has decided enough is enough for now and has remained in range-bound consolidation mode. It traded for the most part between lows of 0.9710 and highs of 0.9770 despite a brief yet overall unsuccessful attempt to move above 98 cents. Earlier in the day, a weaker than expected Chinese manufacturing index placed some downward pressure on the Australian dollar although the effect was rather limited and we open this morning at 0.9765. After what have been some heavy losses this week a quiet day locally should leave the Aussie is a quiet consolidation range, pending any developments offshore into the close of markets.

We expect a range today of 0.9710 – 0.9810

New Zealand Dollar
The New Zealand dollar lost some ground early on in its local session yesterday as the nation’s trade surplus increase much less than what expectations had priced in. Albeit still rising from 186 million to 355 million in surplus is not the end of the world however the markets penalised the NZD/USD pushing it down 35 points to 0.7490. The NZ Government also released their annual budget for the upcoming financial year yesterday however this had little effect on the currency markets and the Kiwi has remained in choppy but range bound trade. It opens this morning for the final day of trade this week at 0.7540 against the Greenback and slightly higher against the Aussie 0.7725.

We expect a range today of 0.7490 – 0.7580

Great British Pound
Revised gross domestic product shrank more than initially forecast in the first quarter of 2012 adding an extra 0.1% onto preliminary estimates, bringing the figure to 0.3%. Sterling saw daily lows below 1.5650 as poor economic growth sparked the predictable speculation as to further potential quantitative easing. As manufacturing indices in Europe also disappointed the markets, Cable remained lower throughout most of the day and it opens this morning at 1.5665. There has been little move on the cross rates with the Australian Dollar and some choppy trades leaves us this morning at 1.6040 against the Aussie and 2.0770 against the Kiwi.

We expect a range today of 1.5970 – 1.6130

Majors
The Euro dollar fell to fresh 22 month lows overnight as disappointing manufacturing indices combined with a decrease in the perceived German business climate hammered an already troubled currency. The purchasing manager’s index reported a fall to 45.0 in both Germany and the euro-zone as a whole. In times of trouble investors usually turn towards German data for some reassurance however none was provided last night. The shared currency subsequently fell to newly established support levels around 1.2520. The US faired only moderately better on their economic calendar as orders for core durable goods posted a 0.6% decrease, and unemployment claims fell by a very modest 2,000. No doubt we once again start a Friday in a firm risk off mode and we have fundamentally a quiet day ahead. USD/JPY trades marginally higher at 79.55 ahead of CPI figures from Japan today. EUR/USD sits at the higher end of its consolidation range at 1.2540.

Data releases:

AUD: No data due for release

NZD: No data due for release

JPY: Tokyo Core CPI y/y; National Core CPI y/y

GBP: No data due for release

EUR: Italian Retail Sales m/m; K German Consumer Climate

USD: Revised UoM Consumer Sentiment; Treasury Currency Report; Revised UoM Inflation Expectations