Australian Dollar
After dipping towards 1.0200 yesterday the Australian dollar has returned to its opening levels for the week following speculation the US central bank may need to provide stimulus following some disappointing US economic indicators overnight. Earlier in the day, little new information saw the Aussie drift lower before some risk-off moves in early Europe saw lows near 1.0200 tested. However, a 50-point rally ensued once a decline in US retail sales came to light and the Greenback was weakened by prospects of possible stimulus as a result. Trading this morning at 1.0240 after earlier touching above 1.0250, today’s highlight is the RBA minutes from this month’s meeting. Clear resistance still remains at 1.0300 and immediate support lies at 1.0200/10.

We expect a range today of 1.0190 – 1.0290

New Zealand Dollar
Some risk on/risk off plays have led the New Zealand Dollar in some choppy trade since yesterday’s open, moving lower initially from 0.7980 to 0.7935 before Greenback weakness lifted the Kiwi back above earlier highs. This morning however brings some domestic focus in the form of inflation data for the second quarter of 2012 where a result either side of the expected 0.5% increase in prices would likely create some intraday volatility for the local unit. With RBA minutes out across the Tasman as well it may be a day to watch the AUD/NZD, the pair currently change hands at a familiar 1.2840 (0.7788).

We expect a range today of 0.7930 – 0.8010

Great British Pound
A quiet, slightly risk-off session during Asian hours on Monday saw the Pound soften moderately, moving lower from opening levels of 1.5580 to find some short-term support at 1.5520 following Merkel’s re-affirmation of Germany’s tough stance in resolving the European debt crisis. A 1.7% decrease in the Rightmove house price index kept some downward pressure on Sterling also however Greenback weakness ultimately emerged as the driving theme later in the day. Paring losses and rising to 1.5630 the Pound awaits results of inflation data due for release this evening, a result inside the BOE’s range will likely increase speculation for further stimulus for the local economy should it be required. However as a result of concerns for overall global growth, the Pound has gained on the antipodean cross rates- GBP/AUD trading at 1.5260 and GBP/NZD at 1.9600.

We expect a range today of 1.5180 – 1.5320

Majors
The Euro moved back below 1.2200 versus the Greenback during European trade overnight as German Chancellor Angela Merkel re-affirmed her tough stance on measures towards solving the region’s debt crisis. Inflation for the area was also released Monday although the consistent reading with the previous month failed to create much volatility in the exchange rate. Majority of action came in the North American session with an unexpected drop in US retail sales weakening the Greenback as speculation once again edged in that the Federal Reserve will need to step in with easing measures to support the economy. The Euro rallied back through 1.2200 to open this morning at 1.2270 and the Japanese Yen pushed higher as well, the USD/JPY dipping to 78.70 before settling to 78.85 at time of writing. Key events to watch today are the ZEW surveys from Germany and the EZ, surveys of economic sentiment key to the health of the economy; inflation data is scheduled from the United States as well as testimony from Fed Chairman Ben Bernanke to Congress on the state of the US economy.

Data releases:

AUD: Monetary Policy Meeting Minutes; New Motor Vehicle Sales m/m

NZD: CPI q/q

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: Core CPI m/m; TIC Long-Term Purchases; Industrial Production m/m