Australian Dollar:
In minutes released by the Reserve Bank of Australia yesterday Governor Glenn Steven’s remained relatively dovish in his outlook for the local economy pointing towards a slowdown in China as one of the main reasons growth may struggle over the medium term. Whilst Asian Stocks provided a boost for risk sentiment throughout the region the market still remains undecided as to whether another rate cut will be forthcoming in November. Moving in an upward direction for much of the past the 24 hours the Australian dollar reached highs of 1.0288 against its US Counterpart well supported once again by better than expected US corporate earnings. Opening this morning around 20 basis points stronger at a rate of 1.0274, markets are likely to become increasingly nervous ahead of Chinese GDP figures which are due for release tomorrow as well the commencement of yet another European Summit on Thursday.

We expect a range today of 1.0230 -1.0310

New Zealand Dollar:
Yesterday’s main news for the Kiwi was the quarterly consumer price index reading, the measure for inflation came in less than economists’ expectations printing a quarterly value of 0.3% giving a yearly figure of 0.8%. The significance of this figure is that it falls outside of the RBNZ’s target range of between 1% and 3%, leaving many to speculate that the RBNZ is now in a position to delay any increase till much later next year and perhaps even lower the OCR to try and weaken the strong NZD. On the back of this data the NZD immediately dropped from 0.8180 to 0.8150 and spent much of the day under pressure, falling to an eventual overnight low of 0.8110. Positive data from Europe and the US did provide some risk-related support, this combined with strengthening dairy prices helps bring us back to around 0.8135 for this morning’s open.

We expect a range today of 0.8110 – 0.8180

Great British Pound:
In a night of CPI data we saw the UK also release their inflationary figures, the number came in smack on expectations with a figure of 2.2% for September versus 2.5% in August. This almost three year low figure does take some of the pressure off the BOE and may allow them room to enact more easing when the current round of stimulus ends next month. This puts the focus squarely to the next major UK data out tonight; the BOE minutes as the market looks for an indication as to future action. On the currency front the GBP lost most of its ground to a strong EUR falling to a low of 1.2350, but the Cable held up surprisingly well on the back of a weakening USD and fell just short of 1.6130. On the local crosses we find the GBP/AUD fairly flat (1.5680) and the GBP/NZD higher (1.9790).

We expect a range today of 1.5650 – 1.5710

Majors:
Investors have managed to take on more risk over the past 24 hours as witnessed by the retreat of the Greenback against a handful of major counterparties with the exception of the Japanese Yen. Well buoyed by US corporate earnings which continue to impress the S&P 500 Index enjoyed its biggest advance in more than a month after US Industrial Production figures surpassed expectation, rising 0.4 percent in September improving dramatically from the 1.4 percent decline seen in August. Taking positive leads out of the US in further signs that Germany’s stance on a potential Spanish Bailout is softening, German Lawmakers announced they would support the opening up of credit lines to Spain ahead of the all important European Summit which is due to kick off Thursday evening. With an economic survey in Germany also heading in the right direction for the second straight month it came as little surprise to see the Euro advance by more than a full US Cent overnight and after reaching highs of 1.3060 it opens this morning near these levels at 1.3051

Data releases

AUD:
Westpac leading index

NZD: No data today

JPY:
No data today

GBP: BOE minutes, Jobless claims

EUR:
Construction output

USD:
Housing starts, building permits