Australian Dollar: Australian consumer are more upbeat leading into the holiday season with consumer confidence improving for December growing 0.2% from -5.3% last month. The improvement in consumer sentiment was of no comfort to investors overnight as the Aussie snapped its 5 day rally against the US Dollar. Offshore investors sold off risk following rekindled concern for the Euro Zone’s financial crisis with Spain debt on review for downgrade. Strong economic data from the US strengthened the Greenback. The Aussie lost 1.54% of its value against the US Dollar, dropping to an intra-day low of 0.9840. This morning the Aussie opens at 0.9855.

We expect a range today 0.9800-0.9897

New Zealand Dollar: The Kiwi opens this morning a 10 week low, buying 0.7390 US Dollars following a night of risk aversion. US Inflation grew only 0.1% in November compared to 0.2% the previous month. Manufacturing on the other hand gained momentum rebounding to 10.57 in December from -11.57 according to the Empire State manufacturing survey while industrial production increased by 0.4 percent. While demand from American consumers is keeping manufacturing afloat, lack of significant consumer price growth indicates producers are unable to pass on the increases in production cost. Investors fearing this dangerous dynamic may erode the global recovery.

We expect a range today of 0.7330-0.7460

Great British Pound: British unemployment increased for the first time in 6 months, growing to 7.9% in the October quarter. Meanwhile the number of jobless claims fell -1200 in November, short of market expectation of -3000. The number of unemployed in the UK now sits at 2.5 million as the labour market struggles to recover. The news weighed on the Pound extending its decline against the US Dollar. Overnight the Sterling slid to a 2 week low of 1.5530 against the US Dollar. The Pound opens this morning at 1.5768 and 2.1016 versus the Aussie and Kiwi respectively ahead of tonight’s UK retail sales report.

We expect a range today of 1.5690-1.5810

Majors: Japan’s quarterly Tankan index revealed confidence among the nation’s largest manufactures deteriorated for the first time since the end of the financial crisis. Sentiment dropped to 5 in December from 8 in September as the recent strength of the Yen eroded exports. Overnight Moody’s warned Spain’s credit rating was at risk of being downgraded. The announcement reminding investors Europe’s sovereign debt crisis may be far from over. Refreshed fears over European debt and lack of change in the employment plunged the Euro towards 1.3200 against the US Dollar. Meanwhile economic data from the US strengthened the currency against the Japanese Yen, once again attempting to break 84.50 overnight.

Data releases

AUD: RBA Bulletin

NZD: Westpac Consumer Sentiment, Business NZ Manufacturing Index

JPY: No Data Today

GBP: No Data Today

EUR: CPI (NOV), Flash Manufacturing & Services PMI

USD: Housing Starts (NOV), Unemployment Claims, Philly Fed Manufacturing Index

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