Australian Dollar
The Aussie Dollar found a little momentum early on in its local session and rallied from support at 1.0500 to highs near 1.0540 by lunchtime. Running into a few headwinds following the release of Chinese manufacturing PMI, concern for the economic outlook of Australia’s largest trading partner dampened appetite for the local unit and a slide back towards 1.0500 ensued. This sentiment continued offshore, and despite positive European manufacturing from Europe and increased speculation of stimulus from the US the Aussie opens lower this morning at 1.0440. The onshore focus for the Aussie through to close of markets this week will be centred on testimony given by RBA Governor Glenn Stevens today before the House of Representatives Standing Committee on Economics; his words will be closely watched for any hints as to monetary policy outlook and potentially any comments given on the strength of the Australian dollar.

We expect a range today of 1.0385 to 1.0485

New Zealand Dollar
The New Zealand dollar traded steadily higher for the most part of its local session yesterday as risk was assumed by investors following increased speculation stimulus will be provided to the markets by the US Federal Reserve. Knocked initially from highs above 0.8180 by disappointing Chinese manufacturing numbers, the Kiwi initially had appeared to have weathered the pressure, holding above 0.8160 into the start of the offshore sessions. Succumbing to offers however in the hours to follow, the New Zealand dollar slipped to lows near 0.8120 by late in the North American session, opening today at 0.8125 against the Greenback and it is also lower against its Australian counterpart at 0.7785. Local trade balance figures are scheduled for release and are the key item to watch for the Kiwi this morning.

We expect a range today of 0.8080 to 0.8150

Great British Pound
After spiking to its highest level since mid May the Cable found resistance in early European trade momentarily peaking above 1.5900. Sellers then emerged to push the GBP/USD back towards 1.5850. With only second tier UK data released the main catalyst for the move was a rally in EUR/GBP with PMI data coming out better than expected in both Germany and France. Despite the pullback in GBP/USD to open this morning near the overnight lows at 1.5860 the GBP/AUD cross rate opens higher thanks mainly to Australian dollar weakness, exchanging around 1.5200.

We expect a range today of 1.5150 to 1.5300

Majors
Rising jobless claims in the US lent support to the argument for further stimulus from the Federal Reserve, just one day after the minutes from its last monetary policy meeting clearly suggested their readiness for action, more so than anyone really expected. The Greenback further weakened to 1.2580 against the Euro and fell below 78.50 against the Japanese Yen, although the assumption that stimulus automatically means more QE3 may be risky for many market participants as the tools for stimulus can be as creative and varied as the central bank chooses. Helping to support the Euro on its climb towards last night’s highs were regional manufacturing figures, and after similar data in China disappointed the European data sets came in largely above expectations. Consolidating last night’s developments the EUR/USD trades this morning at 1.2560; ahead this evening an into the weekend is core durable goods from the US and individual meetings between the Greek PM Samaras and German Chancellor Angela Merkel and French PM Francois Hollande.

Data releases:

AUD: CB Leading Index m/m

NZD: Trade Balance

JPY: Corporate Services Price Index

GBP: Revised GDP q/q; Prelim Business Investment q/q

EUR: Belgium NBB Business Climate

USD: Core Durable Goods Orders m/m