Australian Dollar
The Australian dollar was initially boosted yesterday following the release of the HSBC’s PMI which showed China’s manufacturing activity contracted at its slowest pace in five months. Trading to a late afternoon high of 1.0315 against its US Counterpart RBA Governor Glenn Stevens in a speech made in Sydney sought to ease concerns that Australia remains overly dependent on the Chinese economy, reiterating that even if the pessimists do turn out to be correct, our economy has more than enough ammunition to deal with the fight. Despite its slight run on the upside the Australian dollar opens weaker again this morning at 1.0221, following a continued shift away from riskier backed assets as a result of ongoing debt troubles throughout Europe. Meanwhile today local inflationary figures are due for release at 11:30am with the percentage change in Consumer Prices likely to provide markets with a little more transparency on the timing of the RBA’s next Monetary Policy move.

We expect a range today of 1.0190 – 1.0300

New Zealand Dollar
Whilst the New Zealand dollar enjoyed a relatively flat start to the day supported by a positive PMI reading out of China the bears outplayed the bulls in overnight price action resulting in another round of the selling for the Kiwi. Trading to a 24 hour low of 0.7838 against its US Counterpart riskier backed assets fell across the board as Spain’s borrowing costs again rose whilst European officials hold out very little hope that Greece will be able to meet the terms of its bailout. Opening this morning lower the New Zealand dollar currently buys 78.47 US Cents and with local Trade Balance figures due for release shortly as well as the increasingly gloomy cloud which is Europe hanging over markets, short-term support is likely to tested just above the 78 US Cents.

We expect a range today of 0.7800 – 0.7900

Great British Pound:
It was an all too familiar story for the Great British Pound which has again struggled to distance itself from the woes of its European neighbours. Showing just how hard growth is to come by these days investors will have a keen eye on Britain’s GDP Figures which are likely to show an overall economic contraction of 0.2 percent in the second quarter of this year, when the figures are released this evening. Dragged lower by concerns that growth (or lack there-of) is also spreading to the core, Germany, the Sterling traded between a 24 hour range of (1.5485 – 1.5551) against its US Counterpart, opening relatively unchanged at 1.5505. Meanwhile on the cross-rates the Sterling opens roughly half a cent stronger against both the Aussie (1.5166) and the Kiwi (0.7847).

We expect a range today of 1.5120 -1.5200

Majors:
The mood remained far from positive throughout Europe overnight driving global equities even lower for a third consecutive day. Whether it was European Union officials citing that Greece was missing targets for debt reduction, Moody’s Investor Services cutting the outlook for Germany or the surge in Spanish Yields to fresh highs of 7.64 percent, the news flows did not make for pretty reading. With Europe now well and truly back in focus debt burdens throughout the region, specifically Spain suggest something must now give. Driving the shared currency lower the EURO fell below 1.21 for a second day, bottoming out at 1.2041 against its US Counterpart as we open half a cent lower this morning at 1.2064. Meanwhile in the US whilst Flash Manufacturing and the Richmond Manufacturing Index both came in below expectation the big one to watch will be the release of New Home Sales figures which are due for release this morning. In another bumpy ride for markets overnight, currency volumes have again been dictated by flows into the deepest, largest and safest markets, predominantly the Greenback the Japanese Yen.

Data releases

AUD:
CPI q/q, CB Leading Index m/m

NZD: Trade Balance

JPY:
Trade Balance

GBP: BBA Mortgage Approvals

EUR:
German Ifo Business Climate

USD:
New Home Sales