Australian Dollar: Little movement was felt during Asia as the Aussie remain bound between 0.9830-0.9860 against the US Dollar as traders prepared for China’s release of economic data over the weekend. Investors speculated the data will back the case for the Asian giant to tighten monetary policy. Moving offshore the Aussie reached a 2 day high of 0.9896 as China’s PBOC move to raise its reserve requirements by 0.50% instead of official interest rates. This move sent a wave of relief through the currency market as investors’ interpreted this to be reluctance from China to curb growth while it battles growing inflation. Chinese data out performed expectations across the board, most notable of which were a trade surplus increase of 22.9 billion and CPI accelerating 5.1% in November. The Aussie gave up its gains following improved economic reports from the US. This morning the Aussie opens at 0.9850 versus the US Dollar.

We expect a range today of 0.9820-0.9900

New Zealand Dollar: The Kiwi appreciated 0.7530 versus the Greenback offshore following China’s choice to increase the reserve requirement for the nation’s banks with the PBOC by 0.50% instead of interest rates despite inflation spiking to 5.1%, the most in 28 months. This is the 6th time Chinese monetary officials have raised reserve requirements to restrict credit this year in an attempt to reign in soaring food and housing prices without tempering with growth in its broader economy. Late in the evening the Greenback rose after US officials agreed to extend and expand tax cuts to stimulate the US economy. This morning the Kiwi opens at 0.7480 US Dollars.

We expect a range today of 0.7450-7525

Great British Pound: The Pound rose to its highest level against the US Dollar since 23 November following a report showing housing prices increased to the highest in more than 2 years last month. The news adding to signs the British economy is gaining momentum. Reports also revealed November core producer prices had increased 3.3% over the year. The Sterling briefly touched 1.5860 US Dollars overnight before pulling back and reversing its gains in the face of positive US economic announcements. Reports from the University of Michigan revealed improved consumer sentiment in the US encouraging investors to back the Dollar. Meanwhile the Pound opens this morning slightly weaker against the Aussie at1.6043 and 2.1125 versus the Kiwi.

We expect a range today of 1.5990-1.6090

Majors: The Euro opened offshore at an intra-day high of 1.3280 US Dollars despite much weaker French and Italian industrial production figures, both unexpectedly contracting in November. Chancellor Merkel and President Sarkozy held a joint Cabinet meeting to form a common position ahead of this week’s EU summit to halt the contagion spreading from Greece, agreeing the Euro’s survival is “non-negotiable.” Early in New York trading, the Japanese Yen and Euro fell to a trading day low against the Greenback as American policy makers agreed to continue and expand their current stimulating fiscal policies. Reports revealed the weakened US Dollar has helped exports expand to 2 year highs, reducing the nation’s trade balance by 38.7 billion. The news encouraged investors to add the Green to portfolios, strengthening the Dollar to 84 Yen while sending the Euro to a trading day low of 1.3177 against the Dollar.

Data releases

AUD: NAB Business Confidence, 3Q Dwelling Starts, RBA Gov Stevens Speaks

NZD: Retail Sales OCT

JPY: Industrial Production OCT

GBP: Rightmove HPI m/m, Producer Price Index

EUR: No data today

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