Australian Dollar
Much better than expected employment figures combined with Wednesday’s GDP result to paint a much rosier picture of our local economy yesterday and the Australian dollar rallied accordingly. Following the release by the Australian Bureau of Statistics showing an additional 38,900 jobs were added to the economy during May, the Aussie jumped from pre-announcement levels of 0.9890 to 0.9960 almost immediately. A move later in the day from the Chinese to cut local interest rates gave rise to another rally in the Aussie and here resulted the unit’s best test of parity since we moved below on May 15. Ultimately unsuccessful, this week’s 3.7% gain has proven potentially too rapid and this morning we trade near a full cent lower at 0.9895. Local trade balance figures today present themselves as a potential mover in the Asian session ahead of the US trade balance for May, as well as Chinese inflation data this weekend.

We expect a range today of 0.9850 – 0.9950

New Zealand Dollar
A cut in Chinese interest rates has supported risky assets overnight and New Zealand, with China as one of its main trading partners, has benefited from the move. Speculation that the increased liquidity in the emerging economy will in turn increase demand for antipodean exports boosted the Kiwi to two-week highs above 0.7740 before a strengthening Greenback pulled the pair lower again to 0.7670 by open of local trade today. Stellar employment figures across the Tasman has resulted in the New Zealand dollar trading lower today against its Aussie competitor, and NZD/AUD sits this morning near 0.7750.

We expect a range today of 0.7630 – 0.7720

Great British Pound
Sterling rose across the board yesterday after the Bank of England decided to keep monetary policy unchanged and PMI in the services sector posted a stable reading of 53.3, when many predicted it would drop to 52.6. The first rally higher took Cable from session lows of 1.5440 to break through 1.5500 before the central bank meeting fuelled another rally to test highs near 1.5600. Words from Bernanke overnight did put rest to speculation of QE3, which has earlier this week been serving to weaken the US Dollar; this morning Sterling has weakened to change hands at 1.5530. Impressive employment figures in Australian earlier took the GBP/AUD to lows of 1.5530 however the Pound’s momentum proved too strong and 1.5700 has just been tested early this morning. GBP/NZD has also gained and the pair trade at 2.0250 at time of writing.

We expect a range today of 1.56300 – 1.5780

Majors
The Japanese Yen has lost ground against most of its counterparts yesterday as China cut interest rates for the first time since 2008, lessening appetite for safe haven currencies. Weakening above 100.00 against the euro, the Greenback also gained against the Yen despite its safe-haven status. Testimony from Fed chairman Ben Bernanke last night gave no indication the central bank is currently considering a further round of quantitative easing and rumours that have been weakening the US Dollar all week were quashed. Not quite able to break through 80.00, the Greenback trades this morning at 79.60 Yen ahead of the Japanese current account figures for last month and final GDP for the first quarter of 2012. The euro dollar touched its highest levels in two weeks last night, as the monetary easing in China boosted risk appetite and an admission by German Chancellor Angela Merkel that her country are willing and ready to use any European financial instrument required to maintain stability on the continent fuelled the rally. Touching 1.2620, the single currency unit opens lower this morning, as a strengthening Greenback following Bernanke’s testimony pulled the pair lower to this morning’s levels of 1.2560.

Data releases:

AUD: Trade Balance; Home Loans m/m

NZD: No data due for release

JPY: Current Account; Final GDP q/q

GBP: PPI m/m; Consumer Inflation Expectations

EUR: German Trade Balance; French Trade Balance; French Gov Budget Balance

USD: Trade Balance