Australian Dollar
The Australian dollar finished the week lower on Friday, posting a 1.3% loss overall as encouraging economic data from the United States helped reduce speculation the Fed will intervene with further stimulus. Rumours of such action had previously weighed on the Greenback and therefore left plenty of room for a rally. The Aussie fell over a cent from earlier highs of 1.0520 on Friday, to lows of 1.0410 before some consolidation has lifted the pair to trade at 1.0430 as of today’s open. The highlight this week for the local unit is tomorrow’s release of the RBA minutes from their meeting earlier this month; markets will be hoping to derive some insight as to the outlook for interest rates and accordingly the outlook for the Aussie dollar.

We expect a range today of 1.0380 – 1.0480

New Zealand Dollar
Producer prices rose 0.6% in the second quarter of 2012 it was reported on Friday and with this data release a leading indicator for CPI the markets no doubt reacted favourably. The kiwi was bought against most of its counterparts, rising to highs of 0.8120 against the US Dollar, 0.7750 against the Aussie and above 0.6570 against the Euro. Strength in the Greenback and Euro has seen both these pairs fall back to 0.8070 and 0.6545 respectively. Holding gains against the Aussie however leaves the pair at similar levels this morning with inflation expectations the next key release for the Kiwi on Tuesday.

We expect a range today of 0.8030 – 0.8120

Great British Pound
Sterling has slipped back from highs posted on Thursday as a strengthening Greenback pushed higher across the board following reduced expectations for quantitative easing from the US Federal Reserve. Falling from earlier levels on Friday of 1.5740, lows below 1.5680 were carved before a slight lift takes Cable to trade just beneath 1.5700 this morning. Sentiment on the antipodean crosses has weighed in the Pound’s favour as risk sensitive currencies reacted to the reduced hope for quantitative easing; GBP/AUD rose above 1.5000 to 1.5070 and GBP/NZD lifted to 1.9480 before falling to start this week at 1.9430. Sterling highlights this week are public sector borrowing figures on Tuesday and revised GDP figures on Friday.

We expect a range today of 1.4980 – 1.5110

Majors
A run of positive data releases last week has lifted the Greenback as market participants are now scaling back their expectations for further stimulus measures from the US Federal Reserve. Finishing off with an increase in consumer sentiment the US Dollar rallied to close above 79.50 against the Japanese and posted a 1.7% weekly gain; it also gained against the euro although gains were restricted by a strengthening euro as Spanish bond yields fell lower and Merkel’s earlier comments continued to lend hope to a united front for European leaders in their fight against the debt crisis. A steady CPI reading had little impact for the shared currency and this morning it trades close to last weeks closing levels of 1.2330 with euro-zone manufacturing figures in focus later this week.

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

EUR: No data due for release

USD: No data due for release