Australian Dollar
Despite a pull-back in optimism surrounding Europe last night the Australian Dollar has held up remarkably well. The Aussie rallied to highs near 1.0130 early Monday morning and although worries over Spain and Italy clouded risk sentiment throughout European markets the Aussie left this behind and pushed back towards earlier highs as US equities markets also managed to recover losses. Supporting the Aussie is a relatively strong domestic economy and this is likely to be highlighted when the RBA release the minutes of their latest monetary policy meeting later this morning. Currently the Aussie is supported at 1.0120, a familiar trading level from yesterday’s local session.

We expect a range today of 1.0060 – 1.0160

New Zealand Dollar
The New Zealand dollar has held on to the gains made on Monday morning’s market open, although it has slid marginally from the near six-week highs of 0.7940 reached in very early European trade. Focus has once again moved offshore for the Kiwi in the short-term due to a lack of local data although a rally in US equity markets has helped separate the Kiwi slightly from European troubles. Holding up at 0.7920 this morning the second day of G20 meetings will likely keep the themes in the marketplace centred on Europe and economic growth, although trade against the Aussie dollar will look to the release of the RBA minutes for direction. Having rallied to 0.7850 overnight, the NZD/AUD has pulled back this morning on Aussie strength and trades at 0.7825.

We expect a range today of 0.7880 – 0.7960

Great British Pound
Sterling has traded lower from early Monday highs near 1.5730 as concerns for its neighbouring continent escalate once again. A quick change in focus from post election relief in Greece to ongoing concerns surrounding the health of Italy and Spain seesawed Cable back to 1.5640 before it consolidated around 1.5670 where it opens this morning. Resilience in the Australian and New Zealand dollars has kept the cross rates suppressed and they trade at 1.5480 and 1.9775 respectively. Inflation data for May is the key focus for those watching Sterling today as the rate of inflation will likely influence the Bank of England’s stance on monetary policy moving forward.

We expect a range today of 1.5420 – 1.5550

Majors
The euro’s rise has been short-lived this week as relief following the election win for pro-bailout New Democracy party in Greece was quickly overshadowed by underlying risks to Europe. Economic woes in Italy and Spain were quickly back in the spotlight, and the Euro fell from early Asian highs near 1.2740 to lows near 1.2560. Spanish bond yields tipped once again over the unsustainable 7% level and German Chancellor Angela Merkel said on the first day of G20 meetings that the new Greek government should not be granted additional leeway in terms of their budget. The USD/JPY has settled around the 79.00 level after initial post-election optimism shot the Greenback higher, and today, the second day of the G20 summit is likely to provide direction for the major currency pairs as leaders continue to place pressure on Europe to sort out its finances and come up with a plan of action. The Eur/USD trades this morning at 1.2575 with the German ZEW Economic Sentiment survey likely to come into focus this evening as well.

Data releases:

AUD: Monetary Policy Meeting Minutes

NZD: No data due for release

JPY: No data due for release

GBP: CPI y/y; RPI y/y; HPI y/y

EUR: German ZEW Economic Sentiment; ZEW Economic Sentiment

USD: Building Permits; Housing Starts

All: G20 Meetings Day 2