Australian Dollar
In what has been a rollercoaster ride for the Australian dollar over the past 24 hours, in figures released locally yesterday Business Confidence in Australia fell for the month of May to their lowest level in three years. Given markets remains extremely pessimistic about Spain’s borrowing costs as 10-year yields approach the panic invoking levels of 7%, what we are seeing are significant risk rallies whenever the slighest glimer of hope presents itself. Despite a handful of potentially damaging wires overnight, the Aussie managed to regain its losses from overnight Monday rallying to overnight high of 0.9966 against its US Counterpart. With a glimmer of Greenback weakness again slipping into markets, investors continue to hold out for some further stimulus measures from the US Federal Reserve who are set to meet next week. Meanwhile this morning the Aussie opens close to a full cent stronger at a rate of 0.9962.

We expect a range today of 0.9900 – 1.0000

New Zealand Dollar
The New Zealand Dollar rallied yesterday as the European Central Bank endorsed Spain’s Financial Bailout. Doing their best to instill a sense of calm across markets, signs of stability out of the ECB have done little to sideline underlying fears the debt crisis is spreading as Fitch Ratings Agency downgraded 18 Spanish Banks. Moving between a 24 hour range of (0.7669 -0.7777) against its US Counterpart, the New Zealand dollar has done well to recover from its sell-off earlier in the week as it opens just short of a full cent stronger currently buying 77.75 US Cents. Given global markets still remain a very vulnerable place, risk rallies as witnessed overnight appear likely to continue with investors keen to snap-up the higher-yielding asset on any hint of good news, such is the overall pessimistic slant of the market.

We expect a range today of 0.7720 – 0.7820

Great British Pound
In figures released overnight, a UK Manufacturing Index fell more than economists had forecast in May as the British economy continues to show signs of weakness. With Industrial Production figures also showing zero growth, pressure continues to mount on the Bank of England as Central Banks around the globe move towards more expansionary policies. Despite the string of poor readings The Sterling was surprisingly well bought overnight, supported by a weaker Greenback weighed down by further talks additional stimulus out of the Federal Reserve. Trading to an overnight high of 1.5583 against its US Counterpart the Sterlings advance was limited to the US Currency as it opens weaker against both the Aussie (1.5626) and the Kiwi (2.0023).

We expect a range today of 1.5560 – 1.5680

Majors:
In a mixed session across global markets overnight, US equities reversed Monday’s losses as investors continue to hold onto the very small chance the US Federal Reserve will again come to the party and provide further Stimulus when they meet next week. With markets becoming increasingly nervous about Spain’s underlying debt levels, Fitch Ratings agency warned overnight that the nation will significantly miss its budget deficit target as Spanish 10-year yields rose to their highest level (6.83%) since the Euro was introduced. All of this just 48-hours after 100-billion Euro’s was pledged to the regions banks and its little surprise to see markets behaving unpredicatably. Stuggling to consolidate its losses after a large fall on Monday the Shared Unit has traded between a 24 hour range of (1.2441 – 1.2528) against its US Counterpart to open at a very similiar level to where we left it yesterday at a rate of 1.2512. Looking ahead this evening Europe is again likely to hold the key for global risk sentiment with May Retail Sales the highlight of the economic calender out of the US.

Data releases

AUD:
No data today

NZD: Westpac consumer confidence

JPY:
Core Machinery Orders m/m

GBP: NIESR GDP Estimate, Nationwide Consumer Confidence

EUR:
French CPI m/m, Germain Final CPI m/m, Industrial Production m/m, German 10-y Bond Auction

USD:
Core Retail Sales m/m, PPI m/m, Retail Sales m/m, Core PPI m/m, 10-yr Bond Auction