Australian Dollar: The Australian Dollar declined from 0.9960 to 0.9920 against the US Dollar yesterday after the release locally of the Unemployment and Participation Rate.

The release indicted that the Unemployment Rate fell from 5.2% to 5.0% and that the number of jobs created to the economy totalled 2,300 compared with expectations of 25,200. This result along with the effects to economic growth from the floods in Queensland may have on the local economy have put any potential interest rate raise by the RBA on hold for the next several months.

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Offshore the Australian Dollar traded between 0.9940 and 1.0018 as traders made the return to riskier assets following some weaker than expected US data.

We expect a range today of 0.9900 to 1.000

New Zealand Dollar: The New Zealand Dollar held up above the 0.7600 cents mark yesterday as a return by the markets to high yielders continued. During the Asian session the Kiwi traded between 0.7625 and 0.7700 as the market once again sold the big dollar down. Sparking the rally in the Kiwi was a report out of the US that showed Unemployment Claims for the week rose 35,000 to 445,000 and again highlights the difficulties facing the US economy in the short to medium term. With no data due out of the land of the long white cloud the dollar will take direction from offshore events and happenings.

We expect a range today of 0.7650 to 0.7750

Great British Pound: As expected the Bank of England left interest rates on hold (0.50%) and it’s Asset Purchase Facility (currently at GBP200 Billion) firmly in place. The Bank of England faces a very though challenge over the next several months with it essentially trying to stimulate local growth and curtail inflation. The market is now pricing in a change to interest rates in the UK for third quarter 2011. CABLE hit a year high of 1.5883 during the session. Versus the Australian and New Zealand Dollar, the Pound Sterling is changing hands at 1.5875 and 2.06 respectively.

We expect a range today of 1.5750 to 1.5950

Majors: The European Central Bank left the official cash rate at 1% last night when it held its first meeting of 2011. In the accompanying press conference it alluded to the fact that the ECB would not hesitate to raise interest rates in the Euro Land in order to fight inflation. The EURO rallied hard against the Greenback after the announcement with the EURO charging through the 1.33 mark to eventually hit an intraday high of 1.3377. Adding to the US Dollars recent run of poor form was the release Stateside of Unemployment Claims which increased 35,000 from 410,000 to 445,000, the biggest one week jump in about six months. Despite a positive reading in the US Trade Balance and PPI, traders favoured the GBP and EURO with risk potentially back on the table.


Data releases

AUD: No Data slated for release

NZD: No Data slated for release

JPY: CGPI y/y

GBP: PPI Input and Output m/m

EUR: German CPI; EURO CPI; EURO Trade Balance

USD: Core CPI; Retails Sales; UoM Consumer Sentiment and Inflation Expectations

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