Australian Dollar: It was another volatile local session marked by heavy two-trade on Monday which saw the Aussie gyrate between a low of 1.0330 and a high of 1.0440.

The unit was largely on the back foot however and followed the Euro lower even as the European Central Bank announced steps to ease debt tensions. Markets are still absorbing the weekend’s US rating downgrade to AA+.

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In local economic news, online and print job advertisements, as compiled by the ANZ Bank, fell slightly in July ahead of the official jobs report this Thursday. Australia’s unemployment rate is expected to remain on hold at 4.9 per cent. During overnight trade, support finally gave way around the USD103 cent area and fell steadily during the New York session to a four-an-a-half month low of 1.0179 as equity markets fell once again and commodity prices fell (with the exception of gold which surged more than 3 per cent past US$1,700/oz).

We expect a range today of 1.0080 – 1.0330

New Zealand Dollar: The kiwi endured another volatile session and was largely on the back foot, moving to a low of 0.8290 against the greenback during Monday’s Asian session. With local equities more than 2 per cent lower on the day and markets still absorbing the weekend’s US rating downgrade to AA+, the kiwi struggled to attract buying interest.

Local economic data released yesterday in the form of stable house prices as reported by the REINZ was largely ignored by traders. During the offshore session, the kiwi fell dramatically to a low of US82 cents and opens at this level on Tuesday after another rout on global equity markets overnight. Meanwhile, against the AUD, the kiwi opens at 0.8040.

We expect a range today of 0.8100 – 0.8260

Great British Pound: The Pound Sterling rallied against the Greenback during Asian trade yesterday on the back of Friday’s downgrade of US debt from AAA to AA+ as markets continue to speculate its impact on the global economy and if we are poised to enter yet another recession.

During the offshore session, CABLE moved between 1.6296 and 1.6477 as fear sparked market direction and fundamental trading was thrown out the window.

Fuelling GBP direction this week will be tonight’s Trade Balance (expected – GBP8.2 Billion) and Wednesdays Bank of England Quarterly Inflation Report (projection of inflation and economic growth over a 2 year period). Against the Australian and New Zealand Dollar, Pound is changing hands at time of writing at 1.6000 and 1.9850 respectively.

We expect a range today of 1.5960 – 1.6140

Majors: The Swiss Franc (USD/CHF 0.7530) and the Japanese Yen (USD/JPY 77.60), were the big winners overnight in another volatile 24 hours as fear continues to fuel direction and fundamentals are thrown out the window.

The greenback also rallied against several major currencies as investors sought the refuge of US government debt despite Standard & Poor’s downgrade of the US credit rating on the weekend.

The Euro (1.4150) fell heavily against the US Dollar from a high of 1.4430 as European Central Bank purchases of Spanish and Italian bonds did little to calm nervous investors. The 17-nation currency also slumped to a record low against the Swiss Franc (1.0640).

Equity markets slid sharply lower overnight in panicked trade and investors are likely to continue their flight to the safe havens of the Swiss Franc, Yen and Gold (US$1,717/oz at time of writing). .

Data releases

AUD: No data today

NZD: Credit card spending, July

JPY: No data today

GBP: Trade balance, June

EUR: German trade balance, June

USD: FOMC rate decision