Australian Dollar
In a largely risk-off week the Australian dollar did well to close up above $1.02 Friday night, as data from China and the United States gave rise to a last minute sentiment-based rally. During local hours the Aussie rose from lows near 1.0120 to 1.0170 following relief that Chinese second quarter growth was not as bad as feared at an annualised figure of 7.6%. Overnight, solid demand for Italian bonds and an increase in US producer prices saw the run continue and levels above 1.0220 were seen before the close of markets in New York. Opening with a lift this morning to 1.0240 the local economic calendar is rather bare today with the key focus this week for the Australian Dollar the RBA minutes from its last meeting due for release tomorrow.

We expect a range today of 1.0170 – 1.0260

New Zealand Dollar
It was a choppy week for the New Zealand dollar last week however fears for the euro-zone and global growth were counteracted with hopes of central bank action, thus limiting the fallout. Better than expected data from China and the US sparked a risk rally on Friday to close out a relatively risk-off week, and with no local data released the Kiwi tracked accordingly. Reaching session highs of 0.7930, currency rose further in offshore trade finally closing out the week at 0.7960 and gapping slightly higher to 0.7980 this morning. Ground was lost against the Australian dollar however as the relative risk sensitivity of the two currencies lent in the Aussie’s favour; most of the losses were reversed however and this morning the pair open at 1.2840 (0.7789)

We expect a range today of 0.7920 – 0.8010

Great British Pound
Sterling lifted on Friday as the Bank of England announced a scheme aimed at making cheaper credit available to individuals and companies in an attempt to support its lagging economy. With lending having fallen 16% since its peak in 2008 the program has been welcomed by markets with Cable rising and the Pound strengthening to its strongest level against the Euro since November 2008. Also assisted by risk flows following US PPI data, Cable closed the week up at 1.5580 and EUR/GBP at 0.7860 (1.2723). Risk sensitive currencies such as the Australian and New Zealand Dollars benefited relatively well from Friday night’s move although Pound strength actually prevented losses in the cross rates; GBP/AUD currently at 1.5215 and GBP/NZD at 1.9535.

We expect a range today of 1.5150 – 1.5280

Majors
The Euro has opened higher this morning after its lowest weekly close in more than two years last week as market participants continue to express doubt as to the logistics of implementing a euro-zone banking regulator that would enable the implementation of strategies to recapitalise the region’s banks. The euro did receive a boost as Italy defied recent downgrades to sell over 5 billion Euros of medium and long term bonds on Friday, however it still managed to drift back below 1.2200 before producer prices in the United States gave rise to a last minute risk rally in a largely risk off week. Closing at 1.2240 and opening this morning at 1.2260 the single currency will take direction today from euro-zone CPI and trade balance figures with much anticipated German ZEW (economic sentiment) figures scheduled for Tuesday. The Japanese Yen finished last week as one of the strongest performing currencies, closing against the Greenback at 79.25 and recording a third straight week of gains against its safe-haven counterpart.

Data releases:

AUD: No data due for release

NZD: No data due for release

JPY: No data due for release

GBP: Rightmove HPI m/m;

USD: Retail Sales m/m; Empire State Manufacturing Index; Business Inventories m/m