Australian Dollar: The Australian Dollar opens this morning buying 0.9894 US Dollars. The Queensland floods still remain the focus for investors as the cost of the dictator start to weigh in. Insured losses may cost as much as $6 billion for insurers worldwide according to Munich Re, the world’s largest reinsurer.

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Offshore the Aussie tumbled more than 100pts after the PBOC made a surprise move to increase its reserves ratio requirement by yet another 0.50% in its battle to curb its steadily rising inflation. The hike dampened FX risk flows sending the Aussie down to a intraday low of 0.9855 after opening offshore at 0.9980 US.

We expect a range today of 0.9850-0.9950

New Zealand Dollar: The Kiwi continued its morning slide early offshore to an intraday low of 0.7634 against the US Dollar following China’s announcement to increase reserve ratio requirements with the PBOC by 0.50%. Unlike some other growth link currencies, the Kiwi staged a comeback , reaching for 0.7700 US, after the latest US round of economic figures pointed to some weakness in the American economy. Demand and spending remained weak while cost pressure continued to increase at a steady pace. A report from the University of Michigan revealed consumer sentiment declined to 72.7 from 74.5 previously. This morning the Kiwi opens at 0.7667 US.

We expect a range today of 0.7600-0.7700

Great British Pound: Hot producer prices in the UK did little to inspire the Pound which dipped to 1.5810 against the US Dollar upon release. British producer price inflation rose 3.4%, outstripping estimates of a 1.6% increase for December while housing prices fell for the third month. Policy makers maintained their stationary stance, leaving interest rates and emergency stimulus on hold last week as they continue to measure the threats of rising unemployment and inflation to the nation’s recovery. Slack demand and increasing costs in food and energy adding to the Bank of England’s challenge to contain inflation, which is expected to reach 4%. Disappointing US data saw the Sterling rise toward 1.5890 US late in the evening. Meanwhile the Pound opens this morning at 1.6036 versus the Aussie and 2.0685 against the Kiwi.

We expect a range today of 1.5980-1.6103

Majors: The Euro hit 1.3457 against the Greenback early offshore, its highest level in a month, fuelled by hawkish remarks from ECB President, Jean Claude Trichet. China soon sucked away investor risk appetite, increasing its reserve ratio by 0.50% yet again. The Euro fell as low as 1.3313 US despite Euro zone inflation growing 2.2%, exceeding the ECB 2% limit for the first time in 2 years. Meanwhile the latest set of economic data from the US revealed demand in the US remain weak, with core retail sales in December growing by only 0.5%, US inflation on the on the other hand continued to build at 0.1%. Dampened investor sentiment saw the Greenback rise to 83 Japanese Yen throughout the evening.

Data releases

AUD: Motor Vehicle Sales (DEC), MI Inflation Gauge

NZD: REINZ Housing Price Index, Food Prices (DEC)

JPY: No data today

GBP: No data today

EUR: No data today

USD: No data today

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