Australian Dollar: The ongoing uncertainty in financial markets has continued to keep a lid on the Australian Dollar over the past 24 hours. While the current commodities boom and our high terms of trade can only help keep the Aussie well supported above parity for the time being, it is the troubles of Europe and the US that will continue to limit its upside potential.

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Overnight there was another attempt to move back through 1.0500 however resistance is looking pretty strong and a move back towards safer assets in the North American session pushed our Dollar back to 1.0425, where it opens this morning.

Today, RBA Governor Glen Stevens is due to testify before the House of Representatives Standing Committee on Economics in Melbourne. His words may create some volatility during Asian trade; however the main focus will be on this evening when the 2-day conference in Jackson’s Hole gets underway.

We expect a range today of 1.0360 – 1.0470

New Zealand Dollar: The New Zealand Dollar managed to rally from morning lows yesterday as Core Retail Sales came in better than economist’s predictions at 1.0% higher than the previous quarter. Also helped by an increase in the Food Price Index, a contributor towards the country’s inflation, the Kiwi moved 60 points higher from 0.8260 to 0.8320.

Ongoing concerns for the economic health of Europe and the US meant the riskier currencies were to lose out offshore and it opens against the Greenback this morning back down at 0.8275; and 0.7940 against the Aussie. As with most currencies we are expecting reserved trade for the onshore session at least as market participants await the key meeting of central bankers to get underway this evening.

We expect a range today of 0.8210 – 0.8310

Great British Pound: A mixed set of economic data had little impact on the Pound yesterday as Nationwide Consumer Confidence posted a 0.9% increase and CBI Realised Sales reported an index of -14.

Cable maintained a trading range of 1.6350 to 1.6390 even as MPC member Martin Weale announced that the BOE has left the door open for further stimulus measures although he does not currently deem them necessary.

Sterling did take a hit however when the ban on short-selling of equities in Europe was extended to the end of September. Risk aversion took hold and it fell to 1.6260 before recovering slightly to open this morning at 1.6280. Marginally lower once again against the Aussie and the Kiwi, they trade at 1.5613 and 1.9670 at time of writing.

We expect a range today of 1.5550 – 1.5690

Majors: For a second day running, the Euro has lost ground against the Greenback, this time as a result of regulators in France, Germany and Spain extending the current ban on short-selling of equities. Announcing that the ban of a trading tactic which assumes a negative outlook for the underlying asset is now to stay in place until the end of September.

The Euro tumbled from 1.4450 to 1.4330 on the news as investors read deeper into the actions of the regulators, where they could only assume debt troubles in the area are not yet over. Also contributing to the re-emergence of risk aversion overnight was an increase in US Unemployment Claims and with high unemployment being a significant economic driver into a potential recession.

Markets are expected to trade in tight and conservative ranges in the lead-up to the meeting of the world’s central bankers in Jackson’s Hole today and tomorrow. The Japanese Yen has slid back against the Greenback and is trading at 77.50 and the Euro has consolidated slightly higher at 1.4370.

Data releases

AUD: RBA Gov Stevens Speaks

NZD: No data due for release

JPY: Tokyo Core CPI y/y

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

EUR: M3 Money Supply y/y; German Import Prices m/m

USD: Prelim GDP q/q; Revised UoM Consumer Sentiment; Fed Chairman Bernanke Speaks