Australian Dollar
In the absence of any local economic data, the Aussie traded in a narrow band for much of Monday's local session. It squeezed as high as 1.0376 against the greenback as the market reacted to some positive signs out of the United States as both sides of politics expressed common ground in avoiding the so-called Fiscal cliff. In overnight action, global equity markets rallied on renewed risk appetite and the Aussie followed briefly hitting an overnight high of 1.0416 ahead of this mornings opening level of 1.0400. Reserve Bank board meeting minutes are due for release this morning and Governor Glenn Stevens speaks in Melbourne.

We expect a range today of 1.0350 – 1.0430

New Zealand Dollar
The Kiwi received a boost yesterday after the BNZ-Business New Zealand Performance of Services Index (PSI) rose 7.5 points to 57.4 in October putting an end to three months of contraction in this sector. The kiwi hit an intraday high of 0.8140 where it spent the remainder of the local session in what could only be described as lacklustre trade. There are no further domestic data releases this week which is expected to keep local ranges subdued. Things were different offshore as weekend news that US President Barack Obama is closer to reaching a deal with congress on a long-term deficit reduction program. Global equity markets rallied and the kiwi hit an overnight high of 0.8200 against the greenback. Meanwhile, the kiwi opens marginally stronger against the Australian Dollar at 0.7850.

We expect a range today of 0.8140 – 0.8200

Great Britain Pound
Pound Sterling hit fresh 10-day highs overnight (1.5922) against its US counterpart on a wave of positive sentiment stemming from recent news in the US that President Barack Obama has expressed confidence that he has reached a deal with congress on a long-term deficit reduction program. UK equities rallied 2.4 per cent along with sharp rises in gold, copper and oil as risk appetite was firmly back on the agenda. However, the pound was outperformed by its Antipodean rivals and opens lower on Tuesday against both the Australian Dollar (1.5280) and the New Zealand Dollar (1.9420)

We expect a range today of 1.5260 – 1.5300

Majors
The Euro opens higher today at 1.2800 after hitting fresh 2-week highs in overnight trade in the lead-up to Tuesday’s meeting of Euro-zone Finance Ministers who will be discussing Greek debt bailout plans. The 17-nation currency also received a boost from renewed risk appetite after news on the weekend that US President Barack Obama has expressed confidence that he has reached a deal with congress on a long-term deficit reduction program and therefore avoiding the so-called Fiscal cliff. Oil and base metals also rose along with sharp rallies in French and German equity markets. Meanwhile, sales of existing homes in the United States unexpectedly rose in October as record-low mortgage rates start to make an impact. Purchases climbed 2.1 per cent exceeding economist’s forecasts. The greenback continues to rally against the Japanese yen and hit fresh 7-month highs overnight at 81.57.

Data releases

AUD: Reserve Bank Board Minutes (Nov)

NZD: No data today

JPY: All Industry Activity Index (Sep)

GBP: No data today

EUR: German producer prices (Oct); Euro-Area Finance Ministers discuss Greece

USD: Housing Starts (Oct)