Australian Dollar: The release of the July RBA board minutes on Tuesday signalled an air of caution as far as any near-term rate rises are concerned pushing the Aussie down a third of a US cent in the process. The unit was sold from an intraday high of 1.0644 down to support at 1.0600 where some buying interest took place steadying the ship for much of the Asian session.

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The RBA said that inflation data due for release next Wednesday would be key in determining its views as to the timing of the next move in rates. Investors have trimmed their expectations of any move in the near term. Meanwhile, in offshore trade, the Aussie rallied steadily towards US107 cents and opens today at 1.0720 on the back of a temporary return of risk appetite.

We expect a range today of 1.0680 – 1.0750

New Zealand Dollar: Risk aversion went back out the window overnight and the kiwi rallied to fresh post-float highs against the greenback at 0.8570 and opens at 0.8550 this morning. News out of Europe did little to reassure the market that the debt issue will be resolved anytime soon despite a further meeting this Thursday by EU officials. However, a rally on global equity markets was a big enough catalyst for investors to sell greenbacks and buy the kiwi and the Aussie. With little in the way of data out of the land of the long white cloud this week, the Kiwi, like the Aussie, will be vulnerable to offshore events and happenings. Against the Australian Dollar, the kiwi is marginally higher at 0.7970.

We expect a range today of 0.8510 – 0.8590

Great British Pound: Pound Sterling (1.6120) moved higher against several major currencies overnight ahead of Thursday’s summit of European leaders where they will be discussing Euro-zone “financial stability”. The pound hit a seven-week high yesterday of 0.8705 on the Euro and opens today at 0.8774. Also providing support on the day for Sterling was a positive session on global equity markets. Risk appetite took the unit to an overnight high of 1.6176 against the greenback. Meanwhile, against its antipodean rivals the pound is sharply weaker against the very strong Australian Dollar (1.5010) and New Zealand Dollar (1.8840).

We expect a range today of 1.4960 – 1.5040

Majors: The greenback had its first positive session in several days rallying against the Japanese Yen (79.19) amid talk of a debt-ceiling agreement in the US easing concerns of a default. Housing starts in June also hit a 5-month high in the United States. The Euro (1.4150) also firmed marginally overnight, buoyed by rallies in European and US equity markets and upbeat earnings reports from IBM and Coca-Cola. However, any rally in the 17-nation euro is expected to be short-lived as Germany’s Chancellor Angela Merkel was quick to hose down speculation that Thursday’s summit will resolve the debt crisis in “one step”. Further, the International Monetary Fund have warned that failure to contain Greece risks infecting the rest of the Euro zone. Support for the Euro lies at 1.4000.

Data releases

AUD: Westpac leading index, May; Consumer inflation expectation, July

NZD: No data today

JPY: Leading index, May

GBP: Bank of England minutes

EUR: German PPI, June

USD: Existing home sales, June

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