Australian Dollar:
Most months the GDP figure is followed quite closely by investors and has at least has some influence on the market, however yesterday the data passed by with little interest and the market held within a fairly tight range of less than 20 points. The actual figure came in lower than expected, printing a figure of 0.5% versus 0.6% expected; this does indicate that the economy is feeling the effects of lower commodity prices and a strong AUD. The markets seem to be held in suspense of the US fiscal cliff issue with investors unwilling to take AUD out of its ranges and unless we get surprises in the employment data due out today it seems the cap at 1.05 will remain in place for the short term. Overnight the story was fairly similar although there was short lived dip in the AUD following comments from the US that indicated some progress is being made on the US fiscal agreements. This morning we open on the lower side of yesterday’s ranges at 1.0465 with local employment data today and US employment data tomorrow night likely to dominate the rest of the week.

We expect a range today of 1.0435 – 1.0495

New Zealand Dollar:
At the time of writing we have just had the RBNZ come out with their monthly rate decision and as expected they have remained on hold, leaving the OCR at 2.5 per cent. The accompanying statement was little more hawkish than expected causing the kiwi to rally strongly against most of its major counterparts. The highlights in Wheeler’s comments were the central bank’s continued focus on inflation which it sees increasing on the back of construction investment and a strengthening housing market. The continued focus on inflation along with the bank’s increased growth outlook over the long term suggests interest rates are unlikely to be dropped any time soon. This has seen the NZD/USD rally to one month highs above 0.8280 and AUD/NZD fall below 1.2620. The remainder of the week has nothing in the way of local data but we should still find some movement from central bank decisions in the UK and Europe.

We expect a range today of 0.8250 – 0.8315

Great British Pound:
The cable has been fairly unchanged over the last 24 hours despite the release of the autumn budget statement by George Osborne, Chancellor of Exchequer. The statement predicted a 0.1% contraction in 2012 which is revised down from earlier predictions of 0.8% growth in the previous budget, it also extended the fiscal consolidation by one year to 2017-18. The announcement was expected by the market but does add to further speculation of further easing by the BOE in the future. The Bank of England meet tonight with many expecting them to take a wait and see approach for the time being and this should hold the GBP/USD at current levels on either side of 1.6100. Overnight the pound approached 1.6115 heading into the release before retreating towards 1.6085, this morning we find ourselves just above the low at 1.6090, while GBP/AUD is currently unchanged at 1.5385 and GBP/NZD is sharply lower at 1.9430.

We expect a range today of 1.5355 – 1.5415

Majors:
A fairly quiet Asian session yesterday saw Japanese Yen as the biggest loser following comments from a representative of the Bank of Japan that the bank will debate whether to take additional easing steps at their next meeting, with EUR/USD having a strong day getting back above 1.3120 we had EUR/JPY reaching 6 month highs above 107.9. The Euro was unable to hold onto its gains heading into their local session however, as a Spanish bond auction disappointed and retail sales came in worse than expected. Eurozone retail sales declined by the sharpest rate in 6 months with a figure of -1.2% versus expectations of a fall of 0.2%, this combined with several other poor data releases saw the EUR/USD give up the 1.31 level eventually reaching a low close to 1.3065. Heading into the US things were a bit more positive with news of several Republican defectors joining the call for a bipartisan agreement to the fiscal cliff issues, in particular the proposed tax increases for the rich, this has helped the USD reverse some of the earlier weeks losses and saw USD/JPY move back towards 82.40. Tonight we have Eurozone GDP and European Central Bank rate announcement which will likely be the main focus before Friday’s US employment data.

Data releases:

AUD:
Employment change, unemployment rate

NZD:
No data today

JPY:
Foreign buying

GBP:
BOE rate decision, Visible trade balance

EUR:
Eurozone GDP, ECB rate decision

USD:
Initial jobless claims