Australian Dollar: Following Friday's positive local session as the regions equity markets bounced, the Aussie hit a 5-day high of 1.0397 during late New York trade. Headwinds remain for the currency however. Volatility and shifts in risk sentiment are not the only things hindering the Aussies performance at the moment as there is continued speculation the Reserve Bank Australia (RBA) will cut interest rates this year. Tomorrow, the RBA releases the minutes from its September 6 meeting when rates were left on hold at 4.75 per cent. Against the greenback, the Aussie opens the new week at 1.0300.

We expect a range today of 1.0240 – 1.0340

New Zealand Dollar: The kiwi rallied to a one-week high of 0.8340 on Friday night on a return to positive risk sentiment as the Euro recovered from multi-month lows. Markets remain volatile however and there are plenty of headwinds for the currency as any shift in risk sentiment threatens to hinder the recovery from the August low of 0.7964. Local interest rates are likely to remain at 2.50 per cent as the Reserve Bank of New Zealand recently curbed its growth outlook and talked down any threats to inflation. The highs above US83 cents on Friday night were short-lived and we open the new week at 0.8245. The kiwi is steady against the Australian Dollar (0.7980) and for the time being is holding onto some recent lost ground.

We expect a range today of 0.8180 – 0.8275

Great Britain Pound: Pound Sterling opens lower against the greenback today at 1.5738. The risk for the pound remains to the downside amid a backdrop of less-than-ideal economic data releases and continued speculation the Bank of England may be forced to introduce additional monetary stimulus. During trade on Friday, the pound slipped to a low of 1.5744. The central banks quantitative easing program, which currently stands at 200 billion pounds, remains the preferred method to stimulate demand. Meanwhile, the pound opens weaker against both the Australian Dollar (1.5250) and the New Zealand Dollar (1.9050).

We expect a range today of 1.5230 – 1.5300

Majors: The Euro (1.3696) fell on Friday erasing some of the gains made last week after the European Central Bank said it would lend dollars to Euro-area banks to ease liquidity concerns. After recovering from seven-month lows beneath 1.3500, the 1.4000 level proved too big a mountain to climb. The 17-nation currency made a hasty retreat on Friday after European finance ministers meeting in Poland ruled out efforts to prop up the regions economy or provide any added support for lenders. Risk aversion is likely to hamper the Euro further in the weeks ahead. Meanwhile, as traders sought refuge from the debt turmoil, the Japanese Yen (USD/JPY 76.88) continues to strengthen which is likely to cause concern for the nations central bank. The Bank of Japan last entered currency markets on August 4, 2011 in an effort to curb the Yens steep rise.

Data Releases

AUD: No data today

NZD: Westpac consumer confidence, Q3

JPY: No data today

GBP: Rightmove house prices, Sept

EUR: Euro Zone construction output, July

USD: NAHB Housing market index, Sept