Australian Dollar: The Australian Dollar drifted below the $1.07 mark in quiet holiday trade during Asian hours yesterday. After reaching a session high of 1.0730 the Aussie had dropped to 1.0680 by the opening of European markets.

Strong risk appetite soon developed in the European and North American sessions and the Aussie proceeded to pare its losses and true to its recent form returned to levels just below 1.0775.

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Today we have the scheduled release of first quarter CPI and investors will be watching the key inflation indicator carefully. Resistance on the upside has established itself at 1.0790 and support is at yesterday's lows of 1.0680.

We expect a range today of 1.0720 - 1.0810

New Zealand Dollar: As US equities strengthen and commodities remain high, the New Zealand Dollar has continued to rally in risk -on trade.

Trading quietly onshore yesterday, the Kiwi lacked the momentum to make a clean break above 80 cents although market conditions turned favourable offshore and the local dollar pushed well clear of 0.8000 to trade at new highs near 0.8070 as of the Asian open this morning.

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The Kiwi also gained ground against its antipodean rival and enters onshore trade 0.7480.

We expect a range today of 0.7960 - 0.8090

Great British Pound: Sterling has experienced some choppy trade over the last 24 hours. Falling from above 1.6500 to 1.6440 as a result of a short-lived Greenback recovery by the end of the Asian session yesterday, the Pound soon embarked on a sharp 90 pip rally hitting highs near 1.6530 before falling back to 1.6440 shortly after.

Causing the retreat was a decline in British factory orders, although words from MPC member Andrew Sentance warning the BOE of risks to its inflation credibility if it does not raise interest rates, helped Sterling recover slightly to open today at 1.6480.

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Lower against the Aussie and the Kiwi we trade at 1.5280 and 2.0430 respectively.

We expect a range today of 1.5210 - 1.5340

Majors: The Greenback gained some ground in Asia yesterday as some profit-taking was seen ahead of the Federal Reserves' rate meeting on Thursday.

The euro, still struggling with regional debt concerns, fell below 1.4500 however momentum was gained after the opening of Wall Street and risk -on markets saw the shared currency consolidate near 16 month highs at 1.4640.

Helping to support the Euro was the reported narrowing of the region's budget deficit in 2010 to 6.0 % from 6.3% in 2009. The US dollar failed to gain any ground against the Japanese Yen in slow trade and despite a brief attempt at 82.00 after an increase in US Consumer Confidence we open this morning at 81.50/55.

Data releases

AUD: CPI q/q; Trimmed Mean CPI q/q

NZD: NBNZ Business Confidence

JPY: Retail Sales y/y

GBP: Prelim GDP q/q; BBA Mortgage Approvals; Index of Services 3m/3m

EUR: GfK German Consumer Climate; Industrial New Orders m/m

USD: Core Durable Goods Orders m/m; Crude Oil Inventories; Federal Funds Rate; FOMC Statement

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