Australian Dollar
: The Australian Dollar established a new monthly low during Asian trade yesterday, falling along with faltering risk sentiment to levels near 1.0030. NAB Business Confidence figures failed to move the currency mid-morning when it was announced Business Confidence for the month of November remained unchanged at a positive 2 index points. Late afternoon saw some profit-taking move the Aussie slightly higher to 1.0090 before a strong start to the equity market in Europe and speculation ahead of a statement by the US central bank lifted risk appetite in general.

Reaching highs near the 1.0150 mark higher yielding assets, including the Australian Dollar slipped when the Federal Reserve did not announce any further economic stimulus at this stage and rumours of further downgrades started circulating. In the late New York afternoon S&P escalated fears by announcing that 25 European sovereigns and 42 European banks are on their potential bond downgrades list. Dropping like a lead balloon the Aussie has fallen from its session highs above 1.0100 to 0.9900, taking out the parity barrier without a second glance and it is around here we open this morning. Once again, a light local docket leads us to assume direction will continue to be dominated by events from offshore.

We expect a range today of 0.9950 – 1.0060

New Zealand Dollar
After a quiet local session, where the New Zealand spent the majority of the day range-bound between 0.7615 and 0.7630, the move into offshore initially provided it with a break to the upside. Solid demand at a Spanish debt auction and better than anticipated Eurozone data saw the Kiwi hit an intraday high around 0.7670 before a wave of risk aversion surrounding Europe and the US washed away any gains. Falling initially to 0.7620, a second wave sent it crashing through the 76 cent handle to open this morning at 0.7550. With no important data due for release locally, we can only expect the NZD to take its cue from developments offshore. Movements in the cross-rates were relatively subdued overnight, despite a brief move below 0.7550, the Kiwi recovers to trade at 0.7570 against the Aussie this morning.

We expect a range today of 0.7500 – 0.7590

Great British Pound
The rate of inflation eased in the UK for the month of November, with the annual increase in the Consumer Price Index coming in at 4.8%, down from October’s 5.0%. Retail discounts as well as falling petrol prices are said to be the main contributing factors and many are predicting the rate of inflation will continue to moderate. However with the data remaining close to market expectations Sterling showed little reaction to the move, instead staying close to the pattern displayed by many of the Greenback’s main counterparts.

A late rally in the US Dollar sent the Pound from earlier highs above 1.5600 to lows below 1.5500, where it remains this morning at 1.5460/70. The antipodean crosses, despite heading lower during London hours, open back at similar levels to yesterday with the pound buying A$1.5460 and NZ$2.0460.

We expect a range today of 1.5410 – 1.5530

Majors
Equities opened firmer into the European session overnight however the Euro Dollar remained under pressure as investors continue to worry about the ongoing fiscal crisis in the Eurozone. Supporting the riskier assets in the morning was speculation later the US Federal Reserve would later that day allude to further quantitative easing measures in its statement following the monthly FOMC meeting held last week.

Also helped along by improved economic sentiment as measured by the German ZEW survey, and some encouraging bond auctions by the EFSF and Spain, the Euro managed to hold onto levels near 1.3200 for most of the local session. The Greenback extended gains however once trade moved to New York and the FOMC meeting minutes showed no indication of further monetary stimulus and equities softened on bank downgrade rumours and poorer than anticipated US retail sales. Moving to 11 month lows the Euro trades at 1.3020 this morning and the USD/JPY flirts with 78.00 resistance at 77.97.

Data releases:

AUD:
Westpac Consumer Sentiment

NZD:
No data due for release

JPY:
Revised Industrial Production m/m

GBP:
Claimant Count Change

EUR:
Industrial Production m/m

USD:
Import Prices m/m; Crude Oil Inventories