Australian Dollar: The Australian Dollar fell on the release of yesterdays Trade Balance with the number coming in well below forecast at A$1,93 billion compared with a previous reading of A$2.56 billion.

The Aussie traded at 0.9930 before the announcement and fell almost 20 points on the release as the trade surplus narrowed almost A$70 billion with exports flat for the period and imports up almost 3%.

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As the local session continued so did the AUD sell off with the AUD hitting a low of 0.9818 in the Asian session before settling into an offshore range of 0.9823 to 0.9884. Concerns about the continued flooding in Queensland and its effects to local growth in 2011 will continue to weigh on the AUD over the next several days.

We expect a range today of 0.9800 to 0.9900

New Zealand Dollar: An improved reading in both the NZIER Business Confidence Index (actual 8; previous 6) and Building Consents (actual 8.8%; previous -1.8%) had minimal impact on the Kiwi during Asian trade when released with the NZ Dollar limited to a 20 pip range against the Greenback. The market now expects the Reserve Bank of New Zealand will start to lift interest rates around April 2011. During the offshore session the dollar moved between 0.7560 and 0.7617. There is no significant data schedule for release out of New Zealand this week so the currency will be at the mercy of offshore events and happenings.

We expect a range today of 0.7550 to 0.7650

Great British Pound: The Pound rallied in Asian trade against the Greenback moving slowly and steadily towards the 1.56 handle as traders opted to purchase the Pound ahead of its US counterpart. Out yesterday was the BRC Retails Sales Monitor index (measures change in same store sales at retail level) which indicated that the British consumer is being fairly cautious when it comes to retail spend. The result came in at -0.3% compared with a previous reading of 0.7% with many market analyst believing that the run of recent bad weather in the UK is to blame. Against its Southern Hemisphere counterparts the Pound is changing hands at 1.5790 against the Aussie and 2.0500 against the Kiwi.

We expect a range today of 1.5550 to 1.5750

Majors: European Sovereign Debt issues out of Portugal and Span continue to be the dominate topic for traders at the moment, with the majority of top tier data being ignored in favour of the happenings within the 16 nation currency. Helping the EURO to hold above the 1.29 mark against the Greenback was news that Japan would buy Euro area bonds in an attempt to help improve the regions debt crisis. The EURO reached an intraday high of 1.2992 against the US Dollar but concern over the uptake of Portuguese, Spanish and Italian bond sales scheduled for tomorrow and Friday has the market still on edge. The US Dollar is steady against the Yen (83.20) and down against the Pound (1.5593).


Data releases

AUD: Home Loans m/m

NZD: No data slated for release

JPY: Bank Lending y/y; Current Account

GBP: No data slated for release

EUR: French Govt Budget Balance; Italian Industrial Production m/m

USD: Beige Book, Federal Budget Balance; Import Prices m/m

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