Australian Dollar: An increase in risk appetite has seen the Australian dollar rally to fresh highs once again against the Greenback, reaching 1.0180 in the early hours of this morning. Such levels have not been seen since 1982 and occurred before the currency was floated from the US Dollar. In the short-term momentum looks good for the Australian Dollar, with gold and oil also rallying to highs their strong correlation to the Aussie seems to be providing some support for the time being. With little local data to focus on we are likely to sit back and watch the Australian Dollar see out 2010 as one of the strongest performing major currency of the year.

We expect a range today of 1.0100 – 1.0190

New Zealand Dollar: The New Zealand Dollar has gained around 130 points since the start of Asian trade yesterday with risk sentiment strong during the season’s holiday trade. With US economic indicators pointing towards recovery for the world’s largest economy the Kiwi has capitalised on its commodity status to test resistance at 0.7670. Also gaining ground on the Australian dollar, the Aussie found it difficult to remain above 1.3300 and the barrier was eventually broken. Finding support at 1.3250 (0.7547) the New Zealand Dollar is currently trading at 0.7540.

We expect a range today of 0.7580 – 0.7690

Great British Pound: Sterling has come under pressure once again as economic forecasts for the nation lend little support to the currency. With government spending cuts necessary to reduce the overwhelming budget deficit, unemployment is forecast to rise as public jobs are set to be cut. Weakness in the Greenback has lent the Pound some reprieve, allowing a rally to briefly break 1.5500 before drifting back below to 1.5490. Against the Australian dollar the Pound has moved between 1.5150 and 1.5250 and currently sits at 1.5230; drifting lower against the Kiwi and bouncing off lows of 2.0160 we now trade just above 2.0200.

We expect a range today of 1.5360 – 1.5520

Majors: Dollar weakness has continued across the board throughout yesterday as equities, gold and oil rally to new highs. With the markets forecasting a drop in US unemployment and focusing on positive economic indicators, it is risk-on trade despite the on-going issues in Europe. The Euro rallied to highs just shy of 1.3240 and helped along by comments from Japan’s Finance Minister, Yoshiko Noda, the Yen is now trading close to 81.60. This evening holds the release of some key US data, including unemployment figures, and with investors pricing in favourable results risk sentiment is likely to be the main driver of any price movement.

Data releases

AUD: No data due for release

NZD: No data due for release

JPY: Manufacturing PMI

GBP: No data due for release

EUR: No data due for release

USD: Unemployment Claims; Pending Home Sales m/m; Crude Oil Inventories

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