Australian Dollar: Despite a hasty retreat from a lofty 101.50 US cents during Monday’s domestic session, the Australian Dollar has consolidated itself above parity against the greenback for the time being. In the absence of any local data, the unit was capped as some confidence was eroded after further policy tightening by China which threatens to reduce demand for Australian exports.

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The Chinese central bank has increased reserve ratio requirements by half a percentage point effective February 24 in a further effort to curb lending and inflation. During the offshore session, the Aussie moved between a high of 1.0110 and a low of 1.0073 ahead of this morning’s opening level of 1.0090.

We expect a range today of 1.0045 – 1.0140

New Zealand Dollar: The New Zealand Dollar opens marginally higher against the greenback on Tuesday at 0.7635. During yesterday’s domestic session, the kiwi climbed to a one-week high of 0.7645 on speculation Fonterra Cooperative will raise its payments to farmers, providing a boost to the local economic recovery. The rally was short-lived however after a consumer survey revealed 78 per cent of respondents opined that economic conditions were either “poor” or “not so good” compared to 69 per cent in December. The kiwi hit an intraday low of 0.7610 where buying interest emerged overnight.

We expect a range today of 0.7605 – 0.7655

Great British Pound: Pound Sterling has retreated from its three-week highs above 1.6250 and opens against the greenback on Tuesday at 1.6220. As tensions in the Middle-East escalate, risk sentiment weakened overnight sending the pound to a 24-hour low of 1.6203. Overall however, the currency is being supported by interest rate expectations. Wednesday sees the release of the Bank of England’s minutes from its February 10 meeting. Meanwhile, the pound opens steady against the Australian Dollar (1.6060) and lower against the New Zealand Dollar (2.1222).

We expect a range today of 1.6030 – 1.6120

Majors: Escalating geo-political tensions in the Middle-East has sparked a bout of risk-aversion which sees the Euro open lower today at 1.3673. Despite an unexpected rise in German business confidence in February, which increased to 112.2 from 110.3 in January, the 17-nation currency moved to an overnight low of 1.3646 as equity markets in the Euro zone slumped by an average of 1.8 per cent. Markets were closed overnight for Presidents Day and with the oil price surging, investors sought the safety of the Japanese Yen (83.11) and the Swiss Franc (0.9466).

Data releases

AUD: No data today

NZD: RBNZ Inflation expectation

JPY: No data today

GBP: No data today

EUR: Italian consumer confidence, Feb

USD: Consumer Confidence, Feb

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