Australian Dollar
Holiday-mode continued for the Aussie during Wednesday’s domestic session with the unit trading in a tight band between 1.0135 and 1.0168. Weaker local equities and disappointing economic data out of Japan did not help the Aussie’s cause. Japanese household spending fell 3.2 per cent in November. During the offshore session the unit succumbed to risk aversion and commodities moved lower which saw the Aussie hit an overnight low of 1.0070 ahead of this morning’s opening level of 1.0090. Meanwhile, the AUD remains strong on the cross rates and is trading at 0.7780 against the Euro.

We expect a range today of 1.0020 to 1.0110

New Zealand Dollar
The kiwi found some friends around the US77-cent mark during local trade on Wednesday hitting an intraday high of 0.7750. Foreign exchange markets in the region were lacking their usual depth due to the holiday season with many investors content to sit on the sidelines while events in Europe continue to unfold. During the overnight session the kiwi moved higher initially to 0.7781 (a 3-week high) however, like it’s trans-Tasman rival, succumbed to bearish sentiment and was sold to an overnight low of 0.7671 ahead of this morning’s opening level of 0.7685.

We expect a range today of 0.7660 to 0.7720

Great Britain Pound
Pound Sterling fell overnight on renewed risk aversion and the greenback strengthened across the board. Holiday-thinned trading conditions did not help the pound’s cause which slumped to an overnight low of 1.5455. Moves to the upside are expected to be limited as the local economy faces headwinds, particularly on the employment front, with the jobless rate tipped to reach 8.8 per cent by the end of 2012 according to research by the Chartered Institute of Personnel and Development. Meanwhile, the pound has also lost ground against the Australian Dollar (1.5300) and the New Zealand Dollar (2.0060).

We expect a range today of 1.5280 to 1.5350

Majors
The Euro (1.2940) fell to an 11-month low against the greenback overnight on continued concerns the European sovereign-debt crisis will lead to a recession in 2012. Despite Italian rates falling after a bill sale, the 17-nation currency slumped beneath the crucial support level of 1.3000 hitting a low of 1.2911. Italian ten-year bond yields fell as much as 25 basis points to 6.75 per cent. Meanwhile, the greenback opens higher today against the Yen at 77.90 after weaker-than-expected economic data released in Japan yesterday. Household spending fell 3.2 per cent in November while industrial output also slumped.

Data Releases

AUD: No data today

NZD: No data today

JPY: No data today

GBP: Nationwide house prices, Dec

EUR: No data today

USD: Initial jobless claims, Dec 23