Australian Dollar:
The Australian dollar remained relatively unchanged yesterday after minutes from the RBA’s most recent meeting failed to give any further mention of short-term interest rate movements. Whilst domestic interest rates remain at 3 percent money markets are already factoring in another one or two 25 basis point cuts by mid 2013. Touching lows of 1.0515 against its US counterpart overnight global risk sentiment has remained relatively positive given the signs of progress in US Fiscal Cliff talks. Maintaining levels close to its 3-month high of 1.0585, already ranges have begin to tighten leading up to the holiday season. In what has been quiet session the Australian dollar opens a third of one cent weaker this morning at 1.0528.

We expect a range today of 1.0510 – 1.0560

New Zealand Dollar
Whilst the New Zealand dollar has fallen slightly from a nine-month high against its US Counterpart overnight it has been a generally lacklustre 24 hours for the higher yielding asset. Reaching lows of 0.8400 improved signs of progress between President Barack Obama and The Republicans who are under increased pressure to reach an agreement before year’s end was not enough for the Kiwi to keep its head above water. With so much focus on the US of late, investors attention should be more localised today given the release of Trade Balance figures followed by a final quarter GDP reading tomorrow. Meanwhile the New Zealand dollar opens weaker this morning currently buying 84.19 US Cents.

We expect a range today of 0.8390 – 0.8450

Great British Pound:
UK Inflation remained at its highest point since May last month with the Consumer Price Index rising to 2.7 percent from a year earlier. Matching the median forecast it has been reported the majority of prices pressures came from food and utilities further complicating the task of Policy Makers who are seeking further economic activity through ongoing easing measures. Trading as high as 1.6268 against its US Counterpart the Great British Pound has showed renewed strength across the board over the past 24 hours spurred by higher stock prices and renewed US Budget optimism. On the cross this rates this morning the Sterling opens noticeably higher against both the Aussie (1.5427) and the Kiwi (1.9292)

We expect a range today of 1.5400 -1.5450

Majors:
As witnessed by the tighter than normal ranges over the past couple of days there is a general sense markets have already fallen into holiday mood. In the absence of any key data releases global sentiment has remained positive for much of this week given some solid gains across equity markets amid renewed optimism that progress is finally being made towards avoiding the US Fiscal Cliff. Whilst some concessions have been made, most notably Obama’s pledge to start tax increases for incomes in excess $400 000 instead of his previous mark of $250 000, leading Republican John Boehner has remained strong in his belief that there still exists some key points of difference until an agreement is reached. Meanwhile in Europe overnight and Greece had its credit rating raised by Standard & Poor’s from a grade labelled “selective default” to B-with a stable outlook with the recent debt buyback scheme signalling a strong determination of the shared group to remain intact. Reaching highs of 1.3237 the Euro opens half a cent stronger this morning at 1.3221. Looking ahead this week the Japanese Yen will remain the one to watch given the BOJ is expected to meet tomorrow with the possibility of “unlimited easing” weighing heavily on the nation’s currency.

Data releases

AUD:
MI Leading Index m/m

NZD: Current Account

JPY:
Trade Balance

GBP: MPC Meeting Minutes, CBI Realized Sales

EUR:
German Ifo Business Climate

USD:
Building Permits, Housing Starts

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