Australian Dollar: Australia’s inflation remains above the central bank’s target 3% for the 4th consecutive month. Prices increased 0.2% from the previous month according to the Melbourne Institute. In an index compiled by TD Securities Ltd prices increased 3.8% last month compared to the year prior. The Australian Dollar fell to 0.9860 against the Greenback late in Asia as investors digested China’s restrictive weekend announcements. The Aussie recovered overnight taking back the 0.9900 US region, reaching as high as 0.9968. Overnight market sentiment markedly improved as Philadelphia Fed President Charles Plosser told reporters he has not ruled out favouring tightening monetary policy ‘if economic growth in the United States continues to gain traction and the prospects begin to look ever better’. This morning the Aussie opens at 0.9936 US.

We expect a range today of 0.9870-0.9980

New Zealand Dollar: The Kiwi traded quietly during Asia remaining around 0.7680 US Dollars before heading offshore. Overnight the Kiwi rose to 0.7747 against the US Dollar as investors traded on sentiment for lack of economic data. During the evening European Ministers congregated debating how to revamp and strengthen their rescue fund. Germany, so far the most resistant power, signalled easing its opposition if a ‘comprehensive’ approach could be formulated to inject stability. This morning the Kiwi starts the day buying 0.7720 US Dollars.

We expect a range today of 0.7660-0.7770

Great British Pound: The Pound made its 7th consecutive day of gains against the Greenback creating a fresh high at 1.5954 overnight, its highest level since November last year. British stocks retreated for the 3rd day as European Finance Ministers discussed new strategies to contain the sovereign debt crisis and Apple chief, Steve Jobs, was granted a medical leave of absence. At home, UK house prices gained 0.3% in December while commercial properties increased 6.9% according to London-based research company Investment Property Databank Ltd. This morning the Pound opens at 1.5986 against the Aussie and 2.0566 versus the Kiwi.

We expect a range today of 1.5910-1.6080

Majors: Overnight European policy makers met to discuss comprehensive plans to deal with the region’s debt crisis. Market watchers widely speculating the Ministers will broaden the scope of the emergency fund. Support for a move to allow purchase of government bonds in the open market and increasing the size of the fund have been spear headed by French and Belgium policy makers. The Euro fell to a 2 day low of 1.3243 versus the US Dollar. Suggestive comments from Philly Fed President Plosser temporarily brought the Euro to 1.3340 US but the single currency could not hold onto its 1.3300 US handle. With US markets closed for Martin Luther King Day, investors traded off the bullish comments from the Philadelphia Fed selling the Greenback down to 82.34 Yen.

Data releases

AUD: No data today

NZD: No data today

JPY: Industrial Production (annual& monthly)

GBP: Nationwide Consumer Confidence, RICS House Price Balance, CPI y/y

EUR: ZEW Economic Sentiment

USD: TIC Long-Term Purchases, Empire State Manufacturing Index