Money and Forex Blog

:: Australian Dollar: The Aussie sold off in Asia yesterday following some weaker than expected Japanese data and general risk aversion. After opening the session above the 87 cent handle support gave way in afternoon exchange with the AUD/USD entering offshore on its lows at 0.8625. Fear that some European banks may have to roll over debt obligations with the ECB increased perceived risk on equities, commodities and the AUD with the local currency collapsing quickly to exchange below 85 cents opening this morning at 0.8480. The AUD/USD is likely to be sensitive to any negative news with today’s HIA New Home Sales data to come under the microscope more than what it would normally in light of current market conditions.

- We expect a range today in the AUD/USD rate of 0.8420 to 0.8520

:: Great Britain Pound: In what can be considered a strong performance overnight the Cable held relatively firm to open this morning unchanged from yesterday’s Asian close at 1.5060. Despite a massive move into the Greenback against most majors Pound Sterling stuck solid with some support coming from stronger than expected lending and credit data released overnight. It will be interesting to see if it can remain supported over the next 24 hours with several key U.K and European releases expected to have the important 1.5 level tested at some point. A massive drop in the Australian dollar overnight sees the GBP/AUD cross rate open substantially higher at 1.7750 this morning, 2.5% higher than the same time yesterday.

- We expect a range today in the GBP/AUD rate of 1.7625 to 1.7800

:: New Zealand Dollar: A large 9.6% drop in N.Z Building permits during the month of May instigated some early morning selling in the Kiwi dollar yesterday, a move that was exacerbated by negative sentiment in Japan, Europe and the U.S. After exchanging around 0.7080 prior to the announcement the NZD/USD opens this morning at 0.6920 with concerns about European debt and U.S Consumer Confidence triggering some large selling. Despite the move lower on NZD/USD the Kiwi dollar strengthened against the Aussie dollar putting the AUD/NZD cross rate lower this morning at 1.2250.

- We expect a range today in the NZD/USD rate of 0.6885 to 0.6985

:: Majors: Japanese economic data released yesterday disappointed the market with the unemployment rate increasing to 5.2% and Industrial Production falling 0.1% compared to the previous months 1.3% rise. On a positive note however the job to applicant ratio increased indicating there was an increase in positions available hence strengthening the JPY against the USD in local trade to finish in Asia at 88.80. EUR/USD was sold off during European trade as the July 1 deadline for bank loan repayments to the ECB, a total of 442 billion EUR, looms near. With the market nervous that some banks may not be in a position to repay and will ask for loans to be rolled over risk aversion drove the Euro and “riskier assets” lower. The flight to safety saw EUR/USD hit a low of 1.2150 and USD/JPY 88.25 before both bounced back slightly during the North American afternoon to open this morning in Asia at 1.2180 and 88.55 respectively. Adding to the fears was a much lower than forecast U.S consumer confidence reading with the sentiment survey dropping from 62.7 to 52.9 in June, well below economist forecasts for only a moderate adjustment to 62.5. With U.S consumers less confident about the outlook for employment and wages the Dow Jones Industrial Average closed down 2.65% after having at one stage being 3.3% in the red. Heading into this evenings ECB announcement currency markets will remain volatile with 1.2150 support on EUR/USD likely to be tested once again.

:: Data Releases:
AUD: May HIA New Home Sales, Jun DEWR Skilled Vacancies & May Private Sector Credit
NZD: No Data Expected Today
USD: Jun ADP Employment Change, Jun Chicago PMI & Fedspeak
GBP: Jun GfK Consumer Confidence, Jun Nationwide House Prices, & Q1 GDP
EUR: Jun German Unemployment Change, Jun Eurozone CPI Estimate & Trichet Speach
JPY: May Housing Starts & May Construction Orders

:: Australian Dollar: After staging an early morning rally the Aussie dollar ran into some stiff resistance ahead of 0.8780 to pull back and enter offshore exchange around 0.8720. In relatively uneventful overnight exchanges it remained range bound between 0.8710 and 0.8750 for the majority of the session and opens this morning at 0.8720. At present it appears the AUD/USD is likely to remain range bound awaiting further cues from offshore or Thursday’s local economic data, whichever comes first.

- We expect a range today in the AUD/USD rate of 0.8700 to 0.8750

:: Great Britain Pound: The Cable broke through early London resistance at 1.5065 to post an eventual overnight high of 1.5125, its highest level in over 7 weeks. Comments from Prime Minister Cameron reinforcing the new government’s pledge to reign in the deficit and a rally on the FTSE helped confidence in the Pound Sterling despite a lack of any economic data and a rise the Greenback against the Euro. EUR/GBP was one of the largest movers overnight as the GBP strengthened from 0.8220 to 0.8120. This morning sees the Pound open near its highs at 1.5100 and 1.7320 against the U.S and Australian dollars respectively.

- We expect a range today in the GBP/AUD rate of 1.7175 to 1.7275

:: New Zealand Dollar: The NZD was dealt a blow yesterday with the NBNZ business confidence survey showing a large decline from 48.2 to 40.2. As a consequence the NZD dropped entering early London trade at 0.7075, down from early Monday morning highs around 0.7150. With no real market moving news overnight the Kiwi traded sideways bouncing between support and resistance 20 points either side of this morning’s open at 0.7080 for the majority of the session. This morning sees the release of May Building Permits which will need to deviate significantly from the previous months +8.5% result in order to have any effect on the currency markets and push NZD/USD out of its overnight range.

- We expect a range today in the NZD/USD rate of 0.7050 to 0.7120

:: Majors: Offshore markets returned from the weekend somewhat disappointed with the rhetoric from the G20 meetings buying safe haven currencies such as the Greenback and Yen. EUR/JPY fell from 110.50 in European trade to enter the U.S time-zone below the psychological 110 level. Inflation data out of Germany came in a little lower than economist forecasts with the preliminary year to June figures indicating CPI fell from an annualised rate of 1.2% to 0.9%, also weighing on the EUR/USD which eventually hit a low of 1.2265 down from the Asian close of 1.2355. In U.S economic data the Fed’s closely watched core PCE, a measure of consumer spending, increased marginally from 0.1% to 0.2% beating forecasts for an unchanged 0.1% result.

:: Data Releases:
AUD: No Data Expected Today
NZD: May Building Permits
USD: Jun Consumer Confidence
GBP: Jun GfK Confidence Survey & Mortgage Approvals
EUR: Jun Business Climate Indicator & Jun Industrial Confidence
JPY: May Industrial Production, May Jobless Rate & May Household Spending

:: Australian Dollar: A boost to confidence on global markets helped the Aussie dollar higher on Friday night rallying from 0.8620 to post an eventual high at 0.8750. With the balance of U.S economic data coming in higher than forecast investors appeared comfortable heading into the weekends G20 meeting long AUD with the prospects of bullish comments likely. Headlines over the weekend however focused on European debt so the Aussie dollar opens relatively unchanged at 0.8740 this morning. Looking ahead this week is once again light on market moving economic data with the main attraction being Thursdays May Retail Sales.

- We expect a range today in the AUD/USD rate of 0.8685 to 0.8775

:: Great Britain Pound: Following an early London morning dip to 1.4850 the Pound Sterling staged a steady climb eventually peaking at 1.5075 in late U.S exchange. The Greenback weakened across the board following disappointing economic growth figures out of North America as investors eyed the upcoming G20 meeting for further guidance. This morning sees the Pound open relatively unchanged at 1.5055 and 1.7220 against the U.S and Australian dollars respectively.

- We expect a range today in the GBP/AUD rate of 1.7175 to 1.7275

:: New Zealand Dollar: The Kiwi experienced a V shape recovery against the Greenback on Friday bouncing back from a dip below 70 cents to finish the week on its highs near 0.7150. During Friday’s offshore trade U.S economic data saw GDP disappoint the market however there was some optimism following a slight upward revision in the University of Michigan sentiment survey and with comments expected around the Yuan appreciation from the G20 the NZD/USD finished the week on a bullish note.

- We expect a range today in the NZD/USD rate of 0.7085 to 0.7175

:: Majors: The Euro recovered from an early London sell off bouncing back from 1.2255 to finish the week on its highs near 1.2400. U.S economic data was mixed as headline GDP came in weaker than expected rising an annualised 2.7%, down from 3% the previous quarter whilst core PCE rose 0.7% up from 0.6%. June forecasts from the University of Michigan consumer sentiment survey were revised up from 75.5 to 76 and on the whole the market was relatively bullish on growth prospects heading into the weekends G20 meetings in Toronto Canada. Over the weekend the statement released by the group focused on specific deficit targets with advanced economies focused on halving deficits by 2013 and stable debt to GDP ratios by 2016. Despite officials’ attempts to talk up the announcements as a success concern remains as to how realistic such targets are and the impact on economic growth. In early Monday morning exchange EUR/USD opens slightly down from Friday’s close, changing hands at 1.2370 whilst USD/JPY trades on its lows at 89.25.

:: Data Releases:
AUD: No Data Expected Today
NZD: Jun NBNZ Business Confidence
USD: May PCE & Fedspeak
GBP: No Data Expected Today
EUR: Jun Prelim German CPI
JPY: May Retail Trade

:: Australian Dollar: The Australian Dollar jumped to 0.8770 against the US Dollar as Prime Minister Kevin Rudd was forced to resign. Centre left Deputy Julia Gillard became Australia’s first female Prime Minister took office after ousting Rudd. Mining stocks outperformed as Gillard moved to fix relations between the Government and mining companies agreeing to open negotiations on the proposed mining ‘super tax’. Offshore the Aussie dipped below 0.8650 US as investor confidence took a dive over slowdown in US economic activity and fears for a restructuring of Sothern European debt. The Aussie opens today at 0.8671 US Dollars.

- We expect a range today in the AUD/USD rate of 0.8620 to 0.8720

:: Great Britain Pound: The Pound starts that buying 1.4926 versus the Greenback following a less bullish outlook for the US. Overnight the Sterling grabbed 1.5000 US on a few occasions in a sign of strong relative performance on a night when most risk FX was lower. Positivity continues to flow from the UK following this week’s UK budget, Adair Turner, chairman of the U.K. Financial Services Authority, said he’s confident that U.K. banks will pass European Union stress tests ahead of this weekend’s G20 summit.

- We expect a range today in the GBP/AUD rate of 1.7100 to 1.7300

:: New Zealand Dollar: During Asia the Kiwi traded fairly steadily after better than expected GDP figures, reportedly increasing 0.6%, was negated by Australia’s change in leadership. News that New Zealand’s annual current account deficit reached its lowest level in more than 2 decades had little impact on trading as investors focused their attention abroad. Overnight a wave of risk aversion saw the Kiwi sold down to 0.7035 US. Slightly positive US jobless figures propelled the kiwi back above 0.7100 US. This morning the Kiwi buys 0.7080 US Dollars.

- We expect a range today in the NZD/USD rate of 0.7030 to 0.7130

:: Majors: The Yen continued its rally against the US as signs the global economic recovery may be slowing fuelled demand for safe currencies. The pair lay flat during Asia trading around 89.90 before the yen strengthened to 89.21 US offshore as markets become more volatile. Without intervention the stronger Yen may hurt the fragile Japanese economy. Today the USD/JPY opens at 89.63. Data out of the US overnight saw a dip in the Durable Goods Orders for the month whilst Unemployment Claims came in slightly better than forecast at 457,000 compared with a previous reading of 472,000. Market eyes will be on this weekend''s G20 Meeting in Toronto with expected themes to be global growth, the Chinese Yuan and bank taxes.

:: Data Releases:
AUD: No data slated for release
CAD: No data slated for release
EUR: German Import Prices
GBP: Bank of England Financial Stability Report
JPY: Tokyo and National CPI
NZD: Trade Balance
USD: Final GDP q/q

:: Australian Dollar: With a distinct lack of any local economic data the Aussie dollar traded within a narrow band bouncing between 0.8670 and 0.8770 over the last 24 hours. With concern over the European banking system persisting equity markets and commodity prices have declined in recent days putting a lid on the AUD/USD exchange rate. Overnight the main highlight was the U.S Federal Reserve bank meeting with interest rates and the policy wording both remaining unchanged. The Central bank maintained the lower rates for “an extended period” mantra with the initial reaction triggering a short lived spike in the AUD from 0.8740 to 0.8775 before settling back at this morning’s open of 0.8740. Today sees the release of the conference board leading index which forecasts short to medium term growth prospects for the Australian economy with an increase from the previous months 0.3% result likely to add some short term support to the Aussie dollar

- We expect a range today in the AUD/USD rate of 0.8550 to 0.8650

:: Great Britain Pound: The Pound Sterling broke through short term technical resistance at 1.4850 overnight opening on its highs at 1.4965 against the Greenback this morning. The main catalyst for the move higher was the release of the Bank of England Minutes to the meeting that concluded on June 10 with one member, Andrew Sentance voting in favour of an increase in interest rates. Adding to the rally was a better than forecast survey of retailers and wholesalers as measured by the CBI Realised Sales. The GBP/AUD cross opens this morning at 1.7110, up marginally from yesterdays Asian close of 1.7050.

- We expect a range today in the GBP/AUD rate of 1.6950 to 1.7150

:: New Zealand Dollar: The New Zealand Dollar opens above the 71 cents handle this morning on the back of some weak US data. In offshore trade the Kiwi moved between 0.7025 and 0.7060 as a weaker than expected reading in US New Home Sales and the decision by the F.O.M.C. to leave rates on hold at 0.25% benefited high yielding currencies. Yesterdays release of the NZ Current Account was Kiwi supportive and saw the number come in with a surplus of NZD0.18 Billion compared with a previous reading of negative NZD3.4 billion. Against the Australian Dollar the Kiwi has opened marginally weaker and is changing hands at 1.2256.

- We expect a range today in the NZD/USD rate of 0.6920 to 0.7020

:: Majors: As expected the Federal Open Market Committee left interest rates on hold at 0.25% and delivered dovish statement on the state of the economy which in turn saw the Greenback being sold down against a basket of currencies. In the statement the Fed indicated that the local growth story was “proceeding” and the labour market is gradually improving but unemployment remains high. The greenback fell below the 90 against the Japanese Yen and hit 1.2350 against the EURO. Adding to the big dollars sell off last night was the release of New Home Sales for the month of May. The figure dropped by almost 33% to 300,000 units (from previous of 446,000 units), its lowest reading since 1963 as the Tax Credit Programme came to an end for people looking to purchase or build their first home. The market is now expecting that interest rates in the US will not likely change until very late 2010 or early 2011. Across the Atlantic, German and European flash Services and Manufacturing PMI data came in mixed and saw the EURO touch a low of 1.2220 before it moved slow and steadily up towards the 1.23 level.

:: Data Releases:
AUD: CB Leading Index
CAD: No data slated for release
EUR: EURO Industrial New Orders
GBP: No data slated for release
JPY: Trade Balance
NZD: GDP Quarter on Quarter
USD: Durable Goods Orders and Unemployment Claims

:: Australian Dollar: The Aussie broke past 0.8850 US early offshore last night after China’s announcement saw commodities prices climb to a five week high. Investors backed the Aussie betting a stronger Yuan would boost demand for the raw material exports Australia heavily relies upon. Support for the Aussie eased after investors calmed down from their initial emotional high evaluating any move by the Chinese would be more gradual. The Aussie opens today lower at 0.8760 US Dollars.

- We expect a range today in the AUD/USD rate of 0.8720 to 0.8810

:: Great Britain Pound: The Pound reached a five week high of 1.4936 against the US Dollar late in Asia after China confirmed it would ease its 2 year currency peg against the Greenback. Markets have interpreted the move as a sign of confidence for the global economic recovery spurring a rally for energy stocks. Overnight the UK’s Rightmove Housing Price index for June grew 0.3% from the previous month. Despite the impressive gains in house prices, demand cooled for the Pound offshore ahead of tonight’s British Budget. This morning the Pound opens buying 1.4760 US Dollars, 1.6850 Aussie and 2.0840 Kiwi.

- We expect a range today in the GBP/AUD rate of 1.6800 to 1.6900

:: New Zealand Dollar: Post China’s announcement for a more ‘flexible’ currency peg the Kiwi, like its commodity-based sisters, rallied brushing 0.7150 US Dollars on several occasions offshore. The Kiwi also reached its highest level in almost three years against the Euro overnight trading at its peak around 0.5770 Euro. The Kiwi came off its 5 week high against the Greenback overnight as China’s revaluation shine started to wear off and Fitch’s downgrade of BNP Paribas pared gains. The Kiwi opens at 0.7080 versus the US dollar this morning .

- We expect a range today in the NZD/USD rate of 0.7020 to 0.7100

:: Majors: The Euro opens today lower at 1.2307 USD after falling for a second day. Prospect of a Chinese Yuan re-evaluation fuelled speculation the economic recovery may strengthen spurring investor demand for growth assets. The Euro found some support around 1.2300 overnight as its decline accelerated after Fitch cut a BNP Paribas SA rating. In Japan, Department and Convenient store sales remained in the red while the All Industry Activity index failed to meet expectations. Demand dampened for Japanese bonds for the first time in 3 days after China’s announcement. An optimistic market saw the USD/JPY rally to 91.46 early offshore. The big dollar opens against the Yen this morning at 91.02.

:: Data Releases:
AUD: No data today
CAD: CPI, May
EUR: German IFO, June
GBP: No data today
JPY: No data today
NZD: Credit Card Spending, May
USD: Richmond Fed Manufacturing Index, June

:: Australian Dollar: Commodity currencies rallied on Friday, with the Aussie advancing to a new monthly high reaching 0.8712 USD. Europe’s plan to introduce a stress test for their banks improved risk appetite and certainly helped push the Australian Dollar. Furthering the global economic outlook, the Chinese have announced they will abandon the 6.83 Yuan peg against the Greenback and allow the Yuan ‘increased flexibility’ as China adjusts towards a consumption driven economy. “The recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability,” the People’s Bank of China said. This morning the Aussie opens just beneath US88 cents.

- We expect a range today in the AUD/USD rate of 0.8720 to 0.8850

:: Great Britain Pound: The pound begins the new week steady against the greenback at 1.4850. Positive economic data on Friday helped lift the pound to a 5-week high of 1.4885. A mortgage lending report from the Bank of England showed that loan approvals increased by 51,000 in May compared to 48,000 the previous month. The gains may be short-lived however as the market awaits this week’s emergency UK budget and there are concerns that drastic spending cuts may hamper the nascent economic recovery. Meanwhile, the pound opens lower against both the Australian Dollar (1.6840) and the New Zealand Dollar (2.0830).

- We expect a range today in the GBP/AUD rate of 1.6800 to 1.6900

:: New Zealand Dollar: The New Zealand Dollar opens higher against the greenback on Monday at 0.7110. The kiwi retreated during lack-lustre local trade on Friday down to 0.7017 ahead of an offshore rally above 0.7050 - a one-month high. Stronger commodity prices are supporting the kiwi at present along with improved sentiment towards the 16-nation Euro currency. Positive reaction to recent Spanish bond auctions has soothed concerns about Euro zone finances - at least for the time being. On the cross-rates, the kiwi is trading at 0.8080 against the Australian Dollar and 0.5710 against the Euro.

- We expect a range today in the NZD/USD rate of 0.7050 to 0.7160

:: Majors: The Euro opens this morning at a high of 1.2456 US, a level not seen since May 24th. German Producer Prices surprised jumping 0.3% tripling expectations and moving the Euro to 1.2416 US at the start of European trade. The acceleration in price levels may force the European Central Bank to refrain from any further monetary easing measure. However given the low level of consumer demand in the region, investors hold fast doubts over the regions recovery. Meanwhile the Japanese yen opened this morning stronger at 90.26 after the Japanese government raised its estimate for economic growth to 2.6% this fiscal year.

:: Data Releases:
AUD: No data today
CAD: No data today
EUR: No data today
GBP: Rightmove House Prices, June
JPY: Industry Activity Index, April
NZD: Westpac NZ Consumer Confidence, Q2
USD: No data today

:: Australian Dollar: The Australian Dollar opens higher this morning and is exchanging at 0.8678. In the offshore session to dollar moved between 0.8580 and 0.8680 as risk appetite returned to the markets. News out of the US was fairly diverse with both the weekly Jobless Claims and Philadelphia Fed Manufacturing numbers both missing the mark. The labour market continues to be one area in the US that is continuing to struggle with most other sectors looking relatively “healthy”. The Australian Dollar will be at the mercy of offshore events today as there is no local data slated for release. Support for the local unit continues to be at 0.8550 cents with 0.8720 appearing to be first level resistance on the topside.

- We expect a range today in the AUD/USD rate of 0.8580 to 0.8720

:: Great Britain Pound: The Pound is up against the Greenback today as a stronger than expect reading in Retails Sales last night directed trade. Retail Sales for the month of May came in at 0.6% compared with a previous reading 0.1% as consumers put their hands back in their pockets, however many economists expect this figure to turn dramatically later in the year as Prime Minister David Cameron’s government starts to introduce the deepest budget cuts in a generation. Adding to CABLE’s movement last night were comments from the Bank of England’s Governor Mervyn King’s in which he stated that officials will probably raise interest rates before selling bonds or start an orderly exit from the current stimulus programme. Against its Southern Hemisphere rivals the Pound is trading at 1.7068 against the Australian Dollar and 2.10 against the New Zealand Dollar.

- We expect a range today in the GBP/AUD rate of 1.6950 to 1.7150

:: New Zealand Dollar: Despite a 4 points fall in the ANZ- Roy Morgan Consumer Confidence for June the New Zealand Dollar managed to hold above the 0.6950 cents levels for the majority of Asian trade yesterday. In offshore trade the Kiwi managed to break through and hold above the 0.70 cents level, the first time in almost a month as risk appetite returned and mixed US data was released. During the overnight the session the dollar touched a low of 0.6953 and a high of 0.7060. The NZ Dollar is up against the AUD and is currently trading at 1.2305.

- We expect a range today in the NZD/USD rate of 0.6950 to 0.7050

:: Majors: The Greenback opens softer across the board today as data out of the States came in softer than forecast. Both the Weekly Jobless Claims and Philadelphia Fed Manufacturing came in worse than expected and prompted the EURO to rally (overnight range was 1.2240 to 1.2413). Adding to the EURO’s strength overnight was a strong uptake in the sale of Spanish bonds and this eased concern in the markets about the regions debt. The market is still to be convinced that all is well in Europe and some believe the current policy efforts in placed are going in the right direction. Against the JPY the Big dollar weaker and currently trading at 90.89. The release today of the minutes from the Bank of Japan previous meeting will provide some volatility in the lead to the weekend.

:: Data Releases:
AUD: No data slated for release
CAD: Bank of Canada Carney speaks; Leading Index
EUR: German PPI
GBP: Prelim Mortgage Approvals; Public Sector Net Borrowing
JPY: Monetary Policy Meeting Minutes
NZD: No data slated for release
USD: Philadelphia Fed Manufacturing Index; CPI; Unemployment Claims; Current Account

:: Australian Dollar: The Australian Dollar spent the majority of local trade yesterday above the 0.8600 cents mark as risk appetite returned to the market with high yielders the main benefactor. During the offshore session the little battler traded between 0.8578 and 0.8673 as fundamental trading took hold and the European Sovereign Debt issue and its ramifications on global growth took a back seat. On the domestic data front yesterday the release Housing Starts came in worse than expected (actual 4.3%; previous 16.8%) however its effect was minimal on the Australian Dollar during the Asian session. In offshore trade the Australian Dollar traded between 0.8578 and 0.8670.

- We expect a range today in the AUD/USD rate of 0.8550 to 0.8650

:: Great Britain Pound: A raft of data out of the UK dictated Pound direction during the last 24 hours and of particular note was the Nationwide Consumer Confidence survey and the UK Unemployment rate. The Nationwide Consumer Confidence survey saw a decline with the number down 10 points from 75 to 65, indicating that the UK consumer is becoming a little bit more concerned with current and future economic conditions. On a positive note the Unemployment rate fell 0.1% from 8% to 7.9%, however the result did little to inspire the markets appetite to buy the Pound and the currency was sold down from 1.4850 to 1.4715. At time of writing the Pound Sterling is changing hands at 1.7050 against the Australian Dollar and 2.1110 against the New Zealand Dollar.

- We expect a range today in the GBP/AUD rate of 1.6950 to 1.7150

:: New Zealand Dollar: The release yesterday of the Westpac Consumer Sentiment Survey showed an increase yesterday with the figure coming in at 119.3, up 4.6 from the previous reading of 114.7. Any number above 100 in this survey points towards optimism in the consumer spending which accounts for a majority of overall economic activity. The NZ Dollar was stuck in a 1 cent range last night (0.6920/0.7000) as a mixed bag of data out of the United States saw the NZ Dollar initially rally before profit takers stepped in to curb the rally.

- We expect a range today in the NZD/USD rate of 0.6920 to 0.7020

:: Majors: Rumours that Spain was in talks with the IMF (International Monetary Fund) to access a portion of the recently established EURO bailout fund to help with its debt crisis kept a lid on EUR overnight. Against the Greenback to EURO traded between 1.2253 and 1.2350. News out of the US showed that Industrial Production rose to 1.2% for the month (up from a previous of 0.9%) indicating that output is on the rise by manufacturers. It was however the Housing Start numbers that had the market talking with the report showing that housing starts for the month of May declined by almost 10% (actual 590,000; previous 660,000) with the government tax credit for new homes expiring at the end of April being partially to blame for the decline. The Big Dollar is up against both the JPY (91.38) and GBP (1.4721).

:: Data Releases:
AUD: No data slated for release
CAD: Wholesale Sales
EUR: ECB Monthly Bulletin
GBP: Retail Sales
JPY: No data slated for release
NZD: No data slated for release
USD: Unemployment claims; Current Account; CPI

:: Australian Dollar: The Australian Dollar opens sharply higher against the greenback on Wednesday at 0.8650. During local trade yesterday, the unit moved down from the long-weekend highs above US86 cents after the release of the June Reserve Bank of Australia (RBA) board meeting minutes indicated that interest rates are likely to remain on hold next month. Whilst the RBA remains positive about the medium-term outlook for the local economy, uncertainty over the European debt crisis prompted the decision to leave rates on hold this month. During overnight trade, the Aussie moved between a low of 0.8504 up to a high of 0.8660 on the back of improved risk sentiment as global equities rallied and commodity prices firmed across the board.

- We expect a range today in the AUD/USD rate of 0.8600 to 0.8680

:: Great Britain Pound: The pound opens firmer against the greenback today at 1.4802 on improved risk sentiment. Sterling hit a one-month high of 1.4835 during overnight trade on speculation next week’s emergency budget will bring the nation’s fiscal deficit under control. Also aiding the currency was the release of a U.K. house price index which rose in May to the highest level in four months. Meanwhile, the pound opens steady against both the Australian Dollar (1.7100) and the New Zealand Dollar (2.1180).

- We expect a range today in the GBP/AUD rate of 1.7050 to 1.7160

:: New Zealand Dollar: The New Zealand Dollar opens higher today against its U.S. counterpart at 0.6980. The local currency has been buoyed in recent days by global risk factors along with higher base metal and commodity prices. The rally briefly ran out of steam during yesterday’s local session hitting a low of 0.6920 after credit card spending came in weaker-than-expected at +1.3 per cent in May. During overnight trade, the kiwi moved between a low of 0.6885 up to a high of 0.6993 on the back of improved risk sentiment as global equities rallied and commodity prices firmed across the board. Meanwhile, the kiwi is marginally lower against its trans-Tasman rival at 0.8065.

- We expect a range today in the NZD/USD rate of 0.6910 to 0.7025

:: Majors: The Euro opens higher today at 1.2320 on the back of improved risk sentiment as global stock markets rallied and commodity prices rose. During overnight trade, the 16-nation currency moved between a low of 1.2167 and a high of 1.2348 – its strongest level in two weeks. Whether the tide has turned for the Euro is too early to say as the next level of resistance looms around the 1.2475 area. Meanwhile, the big dollar opens steady against the Japanese Yen at 91.45 after the U.S. Federal Reserve Bank of New York’s general economic index was up 1.4 per cent last month for its eleventh consecutive month of growth.

:: Data Releases:
AUD: Dwelling Starts, Q1
CAD: No data today
EUR: CPI, May
GBP: No data today
JPY: BoJ Monthly Report
NZD: No data today
USD: PPI, Housing Starts, Industrial Production, May

:: Australian Dollar: The Australian Dollar started the week above 0.85 cents and this theme continued in holiday thinned trade as Australia celebrated the Queen’s Birthday yesterday. During the local session the Australian Dollar moved onwards and upwards hitting a high of during Australian time of 0.8575. In offshore trade the little battler moved up to a high of 0.8656 after stronger than expected Euro zone economic data supported the Euro and the “risk trade” was back on. The Aussie opens today at 0.8570. On the local data front today we see the release of the minutes from the Reserve Bank of Australia’s June meeting. The tone of these minutes and any mention to future direction of local interest rates will dictate the Aussie Dollars direction intraday

- We expect a range today in the AUD/USD rate of 0.8500 to 0.8610

:: Great Britain Pound: Pound Sterling opens higher against the greenback today at 1.4730 on speculation interest rates may need to rise. Sterling hit a one-month high of 1.4808 after a report from the Confederation of British Industry raised its forecast for gross domestic product. Policy-maker Andrew Sentance said officials face “interesting debates” in the second half of 2010 on how long stimulus measures will need to be kept in place. Meanwhile, the pound opens lower against both the Australian Dollar (1.7170) and the New Zealand Dollar (2.1210).

- We expect a range today in the GBP/AUD rate of 1.7110 to 1.7220

:: New Zealand Dollar: The New Zealand Dollar mirrored the Aussie Dollar yesterday moving upwards during local trade. Despite a disappointing release of Retail Sales yesterday (Actual -0.3%; previous 0.5%) the Kiwi managed to hold onto its recent advances and appears to have the 0.70 cents figure firmly in its sights. During offshore trade, the NZ Dollar traded between 0.6910 and 0.7010. Against the Australian Dollar, the Kiwi is largely unchanged and is exchanging at 1.2330. With no data slated for release out of the land of the long white cloud for the remainder of the week, the New Zealand Dollar will be at the mercy of offshore events and happenings.

- We expect a range today in the NZD/USD rate of 0.6910 to 0.6990

:: Majors: The Euro (1.2210) moved higher against the big dollar overnight on better-than-expected economic data. Industrial production rose 0.8 per cent in April, following March’s 1.6 per cent expansion, pushing the 16-nation currency to a 24-hour high of 1.2297 – the biggest intraday move in more than two weeks. The gains were short-lived however, as Moody’s Investor Services lowered Greece’s credit rating to non-investment grade. The Euro moved to a low of 1.2115 as attention was once again drawn to the unresolved problems of the EU. Meanwhile, the greenback opens marginally higher against the Japanese Yen at 91.50.

:: Data Releases:
AUD: RBA Minutes
CAD: No data today
EUR: No data today
GBP: CPI May
JPY: Interest rates, June
NZD: No data today
USD: Empire Manufacturing, NAHB Housing Index, June

:: Australian Dollar: The Australian Dollar opens higher on Monday at 0.8530 having spent most of last Friday's domestic session consolidating its position above US84 cents. The local unit received a strong leg up late last week on the back of stronger-than-expected Chinese economic data and a positive session on Friday for both local and the regions equity markets. With it being a public holiday in most states of Australia today, FX volumes traded is expected to be fairly thin and the Australian Dollar should be kept in a fairly narrow range. Against the EURO and GBP, the dollar is changing hands at 0.7032 and 0.5850.

- We expect a range today in the AUD/USD rate of 0.8460 to 0.8560

:: Great Britain Pound: Pound Sterling opens at against the greenback today at 1.4571 after worse-than-expected economic data that had traders questioning the pace of recovery, particularly in light of forthcoming spending cuts at next weeks emergency budget on June 22. U.K manufacturing weakened 0.4 per cent in April compared to most economists forecasts of a 0.5 per cent increase. During Fridays trading session, the pound fell from a high of 1.4758 down to a low of 1.4503. Meanwhile, the pound is changing hands at time of writing at 1.7078 against the Australian Dollar and 2.1089 against the NZ Dollar.

- We expect a range today in the GBP/AUD rate of 1.6950 to 1.7250

:: New Zealand Dollar: European sovereign debt concerns appear to have taken a temporary backseat and the New Zealand Dollar opens higher today against the big dollar at 0.6908. Fridays local session was one of consolidation on the back last weeks 25 basis point rise in the official cash rate and confirmation from Chinese Government officials that their exports had in fact increased by 50 per cent in the 12 months to May. During offshore trade on Friday night, the kiwi climbed steadily and hit a 3-week zenith a shade above US69 cents. With the markets closed across the Tasman today, direction is likely to come from local and Asian equity markets.

- We expect a range today in the NZD/USD rate of 0.6850 to 0.7000

:: Majors: The Euro opens the new week steady at 1.2127 and has been buoyed by signs in recent days that the European sovereign debt crisis is unlikely to derail global growth. During trade on Friday, the Euro managed to hang onto its recent gains above 1.2000, hitting a 24-hour peak of 1.2152. Adding to the EURO’s strength in the offshore session was the release Friday that saw a fall in US Retail Sales month on month. The headline figure indicated that sales fell -1.1% compared with a previous reading of 0.4% indicating that the consumer on High Street USA is reluctant to part with their hard earned dollars. Against the Japanese Yen, the big dollar initially fell to a session low of 91.20 with the release the US Retail data but as global equity markets rallied it did manage to claw back some of the losses to eventually hit an offshore high of 91.75.

:: Data Releases:
AUD: Bank Holiday
CAD: New Motor Vehicle Sales
EUR: Industrial Production
GBP: Bank of England Quarterly Inflation Report
JPY: Prelim Machine Tool Orders
NZD: Retail Sales
USD: FOMC Member Bullard speaks

:: Australian Dollar: The Australian Dollar opens sharply higher today at 0.8490. During local trade on Thursday, the Aussie rallied above US83.50 cents after stronger-than-expected jobs data which provided further evidence of strength in the domestic economy. The unemployment rate fell to 5.2 per cent for the month of May with a net 26,900 positions added. The gains continued offshore as commodity prices rallied on confirmation from Chinese officials that their exports rose in April by 50 per cent compared to a year earlier. During the offshore session, the unit traded between 0.8380 up to a high of 0.8498. Meanwhile, on the cross rates, the Aussie remains strong against the Euro (0.6980).

- We expect a range today in the AUD/USD rate of 0.8440 to 0.8525

:: Great Britain Pound: Pound Sterling (1.4710) opens higher today after the Bank of England left interest rates on hold at a record low of 0.5 per cent whilst maintaining its bond-buying program. A rally in commodities and global equity markets boosted the Euro and in turn risk sentiment, helping the pound reach its highest level this week (1.4716). Keeping a lid on the pound near-term however are concerns over the U.K’s budget deficit. Meanwhile, the pound is lower against both the Australian Dollar (1.7300) and the New Zealand Dollar (2.1430).

- We expect a range today in the GBP/AUD rate of 1.7220 to 1.7350

:: New Zealand Dollar: The New Zealand Dollar opens sharply higher today at 0.6860 after the Reserve Bank of New Zealand raised the Official Cash Rate (OCR) by 25 basis points to 2.75 per cent. The unit rallied on the release of the news and also followed the Australian Dollar higher throughout the local session hitting a high of 0.6780. The rally continued overnight as the Euro strengthened along with global equities and commodities, boosting risk sentiment. Overnight the currency traded between 0.6775 and a high of 0.6875. The kiwi is steady against the Australian Dollar at 0.8070.

- We expect a range today in the NZD/USD rate of 0.6820 to 0.6900

:: Majors: The Euro opens higher today against the greenback at 1.2100 and has moved off the canvas on speculation that Europe’s debt crisis is unlikely to derail growth. The rally is risk currencies overnight was aided by Germany’s Constitutional Court decision removing a roadblock in Germany’s participation in the Euro Zone debt bailout. Over the last 24 hours, the Euro traded between 1.1956 and a high of 1.2141 as the European Central Bank held its key interest rate on hold at 1 per cent and said that “temporary” bond purchases would continue. Meanwhile, the big dollar opens steady against the Japanese Yen (91.30) after the U.S. trade gap widened in April to the highest level in 18 months (US$40.3bio) as exports and imports both declined.

:: Data Releases:
AUD: No data today
CAD: No data today
EUR: No data today
GBP: PPI Output, May
JPY: No data today
NZD: No data today
USD: Retail Sales, May; Consumer confidence, June; Business Inventories, April

:: Australian Dollar: The Australian Dollar opens higher today against the big dollar at 0.8270. Recent gains fizzled out during local trade yesterday as Asian equity markets pulled back helping to push the Aussie down to an intraday low just above US82 cents. Also weighing on the currency was soft economic data in the form of new home loans which fell 1.8 per cent in April – the seventh consecutive monthly fall. During overnight trade, the unit moved between a low of 0.8193 up to a high of 0.8340 as commodity prices moved higher and sentiment improved. Today’s local unemployment data will be closely watched with economists forecasting 20,000 new positions and a small improvement in the jobless rate.

- We expect a range today in the AUD/USD rate of 0.8220 to 0.8340

:: Great Britain Pound: Pound Sterling (1.4520) moved marginally higher overnight against the greenback ahead of tonight’s UK central bank meeting. The Bank of England will most likely leave the benchmark interest rate unchanged at 0.5 per cent. After hitting a two-week low yesterday of 1.4347, the UK currency found some support and reached a 24-hour zenith of 1.4607. Meanwhile, the pound is largely unchanged against its antipodean rivals trading at 1.7500 against the Aussie and 2.1690 versus the New Zealand Dollar.

- We expect a range today in the GBP/AUD rate of 1.7450 to 1.7580

:: New Zealand Dollar: In what was seen by most economists as a 50/50 call, the Reserve Bank of New Zealand has today lifted the official cash rate by 25 basis points to 2.75 per cent. The last time the central bank raised rates was July 2007. Central Bank Governor Mr Alan Bollard said in his accompanying statement that “further removal of stimulus will be reviewed in light of economic and financial market developments”. As a result, the kiwi rallied half-a-US-cent at this morning’s open and at time of writing is trading at 0.6710. During overnight trade, the currency moved between a low of 0.6660 up to a high of 0.6740 as commodity prices moved higher supporting currencies linked to risk. Meanwhile, the kiwi is trading at 0.8080 against the Australian Dollar.

- We expect a range today in the NZD/USD rate of 0.6680 to 0.6750

:: Majors: The Euro (1.1970) moved higher against the greenback overnight on speculation the European Central Bank (ECB) will use tomorrow’s interest rate announcement as an opportunity to comment on how it intends to address the deterioration in financial market conditions. A rally in stocks and commodities also buoyed sentiment for a change, enabling the 16-nation currency to hit an overnight high of 1.2070. Euro zone interest rates are tipped to remain at 1 per cent. Meanwhile, the big dollar is steady against the Japanese Yen at 91.28 after the U.S. Federal Reserve’s Beige Book business survey revealed the economy is making modest gains in consumer and business activity.

:: Data Releases:
AUD: Unemployment rate, May
CAD: No data today
EUR: ECB Interest rates, May
GBP: BoE Interest rates, May
JPY: GDP, Q1
NZD: RBNZ Interest rates, May
USD: No data today

:: Australian Dollar: The Australian Dollar climbed almost 1 cent during the local session yesterday despite a weaker than expected reading from the NAB Business Confidence Survey. The survey (a leading indicator of the economic health of local business released on a monthly basis) showed a decline in conditions with the release coming in at 5 compared with the previous months reading of 13. In offshore trade the Australian Dollar moved between 0.8130 and 0.8285 as the effects of the European Sovereign Debt crisis continues to grip the market and the impact it may have on the global recovery story. On the local data front the release this morning of the Westpac Consumer Sentiment report and monthly Home loans are expected to have minimal impact of dollar direction.

- We expect a range today in the AUD/USD rate of 0.8220 to 0.8320

:: Great Britain Pound: The Pound weakened overnight as rating agency Fitch expressed concern about the current level of UK debt and how it would reign in this debt in the foreseeable future. The agency however did not revise the credit rating of AAA for the UK but the comments itself saw the Pound down against the Greenback. The warning came a day after Prime Minster David Cameron told Britons to expect years of spending cuts. In the offshore session the Pound traded between 1.4350 and 1.4475. Against its Southern Hemisphere rivals, the Pound is changing hands at 1.7482 against the Australian Dollar and 2.1681 against the New Zealand Dollar.

- We expect a range today in the GBP/AUD rate of 1.7300 to 1.7500

:: New Zealand Dollar: The Reserve Bank of New Zealand is expected to raise interest rates this morning by 25 basis points from 2.50% to 2.75%. This will be the first increase in the currency in almost 3 years. In offshore trade the New Zealand Dollar traded between 0.6572 and 0.6684 with the market firmly pricing in the rise. It is expected that Governor Allan to make mention that they believe inflation in NZ is starting to gather pace and must be controlled. Yesterdays release of the Manufacturing Sales Index spurred demand for the local un it during the Asian session with the release coming in above expectations at 0.95 (previous 0.7%).

- We expect a range today in the NZD/USD rate of 0.6580 to 0.6750

:: Majors: The Greenback opens steady against the EURO and JPY this morning and at time of writing this report is changing hands at 1.1969 and 91.53 respectively. Adding to the EURO’s movements overnight was some mixed German data. The trade Balance for Germany shrunk from EUR14.1 Billion to EUR13.1 Billion overnight whilst some positive sign in the Industrial Production area saw a 0.2% increase from a previous reading of 0.7% to 0.9%. The data was generally overlooked by some participants as the lingering story of European Sovereign Debt and its effects on future economic growth continue to be the dominant theme. Thursday’s announcement by the European Central Bank and Bank of England (both are expected to keep interest on hold) will be closely looked at with accompanying statements from each to dictate market direction.

:: Data Releases:
AUD: Westpac Consumer Sentiment
CAD: No data slated for release
EUR: No data slated for release
GBP: BRC Shop Price Index; Trade Balance
JPY: Prelim Machine Tool Orders
NZD: RBNZ Interest Rate decision
USD: Fed Beige Book

:: Australian Dollar: The Australian Dollar opens lower against the greenback today at 0.8100. Support at US82 cents gave way yesterday very early in the local session as equity markets lost almost 3 per cent and the 16-nation Euro currency slid to new multi-year lows. The Aussie dipped its toe briefly beneath 0.8100 and steadied around 0.8235 after local economic data hinting at renewed strength in the labour market. The ANZ Bank’s monthly survey of job advertisements rose 4.3 per cent in May suggesting Australian employers remain confident despite a series of interest rate rise since last October. In overnight trade, the Aussie followed the fluctuating fortunes of the Euro however the gains were unsustainable.

- We expect a range today in the AUD/USD rate of 0.8030 to 0.8140

:: Great Britain Pound: Pound Sterling moved higher against the greenback overnight and opens at 1.4460 after Prime Minister David Cameron indicated this month’s emergency budget will tackle the nation’s debt problem. In overnight trade, the pound moved between a low of 1.4387 up to a high of 1.4562. Risk-aversion and greenback strength are likely to continue to weigh on the pound near-term. Meanwhile, the pound has outperformed the Australian Dollar (1.7840) and the New Zealand Dollar (2.1950).

- We expect a range today in the GBP/AUD rate of 1.7800 to 1.7925

:: New Zealand Dollar: The New Zealand Dollar opens sharply lower today against the greenback at 0.6585. A public holiday on Monday kept volumes to a minimum but this did not prevent the kiwi coming under intense selling pressure as the Euro continued its recent dramatic slide. The local unit hit an intraday low of US66 cents. During overnight trade the kiwi briefly hit a high towards US67 cents however greenback strength emerged once again and the unit fell sharply late in the session all the way to this morning’s opening level.

- We expect a range today in the NZD/USD rate of 0.6500 to 0.6620

:: Majors: The Euro opens lower against the greenback on Tuesday at 1.1910. The 16-nation currency fluctuated between fresh four-year lows of 1.1875 and a session-high 1.1991 after German factory orders rose 2.8 per cent. The data was much better than economists had predicted and allowed the Euro to rebound. Meanwhile, the greenback remains strong across the board as investors remain concerned about the European debt crisis and its potential negative impact on global growth. The big dollar opens at 91.34 against the Japanese Yen.

:: Data Releases:
AUD: No data today
CAD: No data today
EUR: French Central Government Balance, April
GBP: No data today
JPY: No data today
NZD: Manufacturing Activity, Q1
USD: ABC Consumer Confidence, June 6

:: Australian Dollar: The Australian Dollar opens the new week sharply lower at 0.8190. After a couple of failed attempts late last week to hold above the US84-cent level, the Aussie has succumbed to selling pressure and risk-aversion quicker than you can say "European sovereign-debt crisis". Reports of further bad news out of Europe on Friday night sent the Euro to new four-year lows against the greenback and the Aussie followed, plummeting US1-cent to 0.8300 ahead of the New York session. It was a steady decline for the remainder of the offshore session after U.S. payrolls data came in weaker than expected. Investors eschewed risk and moved into the Japanese Yen, Greenback and Swiss Franc.

- We expect a range today in the AUD/USD rate of 0.8120 to 0.8240

:: Great Britain Pound: Pound Sterling opens the new weak softer against the greenback at 1.4411. Cable rose, particularly against the Euro, early in the session after a report showed U.K. house prices rose 6.9 per cent in the 3 months to May providing hope that the economic recovery is gathering pace. However, the gains were short-lived after U.S. non-farm payrolls data came in weaker-than-expected and investors shunned risk in favour of the Japanese Yen and Greenback. Meanwhile, the pound is higher against both the Australian Dollar (1.7560) and the New Zealand Dollar (2.1540).

- We expect a range today in the GBP/AUD rate of 1.7500 to 1.7625

:: New Zealand Dollar: The New Zealand Dollar lost ground on Friday night as risk-aversion took over after weaker-than-expected US payrolls data. The kiwi opens today at 0.6685 after hitting an overnight low of 0.6680 during the European session. Sovereign debt concerns in Europe sent the 16-nation currency to fresh four-year lows dragging the Australian and New Zealand currencies down with it as the greenback strengthened across the board. A thin local market due to a public holiday in New Zealand today is unlikely to assist any moves to the topside. Meanwhile, the kiwi opens at 0.8150 against the Australian Dollar.

- We expect a range today in the NZD/USD rate of 0.6610 to 0.6725

:: Majors: The Euro hit fresh four-year lows beneath 1.2000 against the greenback on Friday amid renewed speculation the European sovereign-debt crisis is widening. Dampening the mood of risk-wary investors were comments from a spokesman for the Hungarian Prime Minister who said their nation was in a "grave situation" because the previous government had "lied" about the economy. The 16-nation currency hit a low of 1.1954 - a level not seen since March 2006. It has gapped lower this morning, opening at 1.1925. The risk-aversion theme also crossed the Atlantic after U.S. employment data came in weaker than anticipated. The greenback and Japanese Yen (91.68) strengthened across the board after U.S. payrolls rose by 431,000. The gain was smaller than the 531,000 anticipated by most analysts.

:: Data Releases:
AUD: ANZ job ads, May
CAD: No data today
EUR: No data today
GBP: No data today
JPY: No data today
NZD: Queen''s Birthday Public Holiday
USD: Consumer Credit, Apr

:: Australian Dollar: The Aussie Dollar rallied in Asia yesterday extending its gains on the Greenback surprising investors with a trade surplus 134 million. The positive figure boosted market morale and the Aussies tested its 0.8500 US Dollar barrier on several occasions early offshore. However the Greenback’s safe haven appeal pulled investors back as US equities fell over fresh concerns surfaced China may curb its demand for base metals and Europe’s sovereign debt crisis may worsen. The Aussie dropped to an intra-day low of 0.8363 after US economic data failed to deliver. This morning the Aussie starts the day buying 0.8420 US dollars.

- We expect a range today in the AUD/USD rate of 0.8350 to 0.8500

:: Great Britain Pound: News that U.K. house prices climbed 0.5%, the highest in almost two years, fuelled optimism the economic recovery is solidifying after house values dropped by about 20 percent during the recession. The Sterling climbed to 1.4740 US on the back of the housing report early offshore but could not hold onto its gains amid concerns Europe’s sovereign debt crisis will worsen. Investors rushed to the Greenback after initial US reports revealed ADP Non-Farm employment figures did not meet expectations. The Pound opens today at 1.4626 against the USD while buying 1.7335 AUD and 2.1381 Kiwi.

- We expect a range today in the GBP/AUD rate of 1.7250 to 1.7420

:: New Zealand Dollar: The Kiwi benefitted from carry trade, flirting with 0.7000 US on several occasions, after Australian economic data improved demand for riskier assets during Asian trade. Optimism gave way as rumours intensified that the Greek debt crisis is spreading to several Eastern European countries, combined with the dangerous situation in the Korean Peninsula, dragged stocks, commodities, and riskier currencies down offshore. Investors intensified their retreat from the riskier Kiwi after lack lustre US data cast some doubt over the strength of the US recovery. The Kiwi buys 0.6830 US dollars at the start of today’s trade.

- We expect a range today in the NZD/USD rate of 0.6780 to 0.6880

:: Majors: Once again the Euro struggled to maintain upside momentum running into stiff resistance around 1.2320 in early offshore trade to open this morning on its lows at 1.2160 against the Greenback. The main catalyst for the renewed selling interest came on the back of extremely disappointing Euro-Zone Retail Sales figures with consumer spending declining by 1.2% against expectations for a relatively flat 0.1% rise. In U.S economic data released overnight several key indicators fell short of analyst forecasts with the closely watched ADP employment report indicating 55k jobs added in the non-farm and government industries, short of expectations for a rise closer to 70k. The result comes a day before the release of this evening’s employment report with the official Non-Farm Payroll data expected to show a massive increase of around 500k jobs growth for the month of May. It is however interesting to note that the majority of the gains are expected to be temporary due to the large number of workers employed to conduct the door to door census survey. USD/JPY continued to consolidate recent gains above the 92 handle having traded as high as 92.80 opening this morning at 92.60. With the G-20 meeting underway, along with key U.S and European data scheduled for release currency markets are expected to be volatile heading into the weekend with the Greenback expected to be the main benefactor.

:: Data Releases:
AUD: No Data Expected Today
NZD: No Data Expected Today
USD: May Employment Report & FedSpeak
GBP: Jun Halifax House Price Index & May New Car Registrations
EUR: Q1 GDP
JPY: No Data Expected Today

:: Australian Dollar: The Australian dollar rallied after third quarter of growth data showed fifth consecutive quarter of expansion. Gross Domestic Product rose a solid 0.5% in the previous quarter in line with expectations, while yearly figures revealed the economy grew 2.7%. Yesterday’s positive outcome may pave the way for the central bank to resume raising rates in the coming months. This morning the Aussie opens at 0.8410, not far from the overnight high of 0.8425. Positive home sales data in the United States overnight bolstered the greenback against the Euro and pound helping the Aussie to open higher on the cross-rates.

- We expect a range today in the AUD/USD rate of 0.8370 to 0.8470

:: Great Britain Pound: The Pound climbed to 1.4770 US towards the end of Asian trading in the build up to what was expected to be positive credit and mortgage figures for the UK. Consumer credit fell -0.1 billion while mortgage approvals surprised the market with an increase of 49.9 thousand. The mixed bag saw the Pound retreat to 1.4650 against the Greenback where it hovered for most of the night. The news suggests the British economy may continue to experience only a mild recovery. This morning the Cable opens at 1.4652 US. The Sterling also opens open lower against the Aussie and Kiwi buying 1.7411 and 2.1521 respectively.

- We expect a range today in the GBP/AUD rate of 1.7325 to 1.7480

:: New Zealand Dollar: The Kiwi brushed past 0.6820 in last night’s rally after commodity export prices climbed 2.5% in May. Export prices have increased for 14 consecutive months signalling exports will be the driving force for New Zealand growth this year. Investors speculated a hike in interest rates may be on the table next week for New Zealand after the Bank of Canada raised rates last night. The New Zealand Dollar opens just shy of last night’s high at 0.6812 against the Greenback. Meanwhile, the kiwi opens a shade weaker against the Australian Dollar at 0.8075.

- We expect a range today in the NZD/USD rate of 0.6750 to 0.6850

:: Majors: The Yen weakened in Asia yesterday following the resignation of the Japanese PM moving below what has been resistance at 92 against the Greenback trading at 92.35 overnight. In Europe a stronger than expected April Producer Prices report gave the Euro an early boost however selling emerged at 1.2270 to cap any further advances with EUR/USD pulling back to an overnight low 100 points lower at 1.2170. Risk appetite received a boost later in the session as U.S Pending Home sales surprised analysts who had forecast a 4.9% rise by increasing 6% sending North American equity markets higher. This morning sees the big dollar open in Asia exchanging at 1.2240 and 92.20 against the Euro and Yen respectively ahead of the commencement of the G20 meeting which is likely to see some comments about the European debt crisis.

:: Data Releases:
AUD: May Aig Performance of Service Index & Apr Trade Balance
NZD: No Data Expected Today
USD: May ADP Employment, Apr Factory Orders & May ISM Non Manufacturing
GBP: No Data Expected Today
EUR: Apr Retail Sales & May PMI Services
JPY: Q1 Capital Spending

:: Australian Dollar: For the second time in nine months the Reserve Bank of Australia left rates unchanged at 4.5% as expected and the Aussie fell as the RBA signalled policy makers may keep borrowing costs steady as ‘the effects of earlier expansionary policy measures will be diminishing.’ In other Australian economic data released yesterday building approvals declined 14.8%, the most in over two years whilst Retail Sales increased a more than expected 0.6%. The Chinese manufacturing sector as measured by the PMI survey dropped to 53.9 sparking a wave of risk aversion over concerns of a slowdown in global economic activity. After opening above 0.8450, the Aussie traded down to 0.8280 in early offshore exchange before recovering briefly after US manufacturing figures printed above expectations. This morning the Australian Dollar opens lower at 0.8287 US dollars.

- We expect a range today in the AUD/USD rate of 0.8250 to 0.8400

:: Great Britain Pound: The Pound opens this morning buying 1.4640 US dollars after UK manufacturing PMI held steady at 58.0 beating market expectations of a drop to 57.8. A report also showed UK housing prices had their biggest annual gain in more than two and a half years in April. The Pound rallied offshore breaking above 1.4700 US dollars as UK insurer Prudential Plc’s bid to take over American International Group Inc’s main Asian unit failed, preventing the outflow of $35.5 billion from the UK. Meanwhile the Sterling opens higher against the Aussie and Kiwi at 1.7650 and 2.1700 respectively.

- We expect a range today in the GBP/AUD rate of 1.7450 to 1.7700

:: New Zealand Dollar: The Kiwi continued its downward trend as fresh concerns over the health of the global economy flared when China reported a decline in manufacturing. The Kiwi felt to 0.6700 against the Greenback offshore as the European Central Bank warned that EU banks face up to 195 billion Euros in a "second wave" of potential loan losses over the next 18 months due to the financial crisis. Better than expected US data saw the Kiwi hold up around 0.6800 however support eventually gave way to send the NZD/USD back to this morning’s open around 0.6750.

- We expect a range today in the NZD/USD rate of 0.6700 to 0.6850

:: Majors: Risk appetite took a hit in Asia yesterday following the release of weaker than expected Chinese manufacturing data. The trend continued in early offshore exchange with EUR/USD trading as low as 1.2110, its lowest level since April 2006. The Euro found some support rallying back above 1.2300 following a decrease in German unemployment during May as the number of people out of work declined a seasonally adjusted 45k, well above analyst forecasts of around 18k. Demand for the Greenback re-emerged as data out of the U.S saw the manufacturing sector hold up better than expected and construction spending rise 2.7% in April, well above forecasts of a modest 0.1% rise. This morning sees the big dollar open at 1.2225 against the Euro and 90.95 Yen with the head of the German central bank Weber speaking this evening sure to keep the Euro volatile. In other news the Bank of Canada became the first of the G7 nations to increase interest rates since the recession although the 0.25% rise to 0.5% could be the first and last for some time. The accompanying rhetoric suggested rates could remain at 0.5% for some time “Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments”, a very cautious statement indeed. USD/CAD traded within a wide range between 1.0420 and 1.0560 throughout the session with the CAD relinquishing its initial gains following the announcement once the market had digested the statement.

:: Data Releases:
AUD: Q1 GDP
NZD: May ANZ Commodity Price Index
USD: Apr Pending Home Sales
GBP: May Construction PMI & Apr Net Mortgage Approvals
EUR: Apr PPI
JPY: May Monetary Base

:: Australian Dollar: A higher than expected inflation gauge reading, solid New Home Sales and an increase in company operating profits all gave the Aussie dollar a boost in local trade yesterday as it recovered from an early morning dip to 0.8425 to push marginally above the 85 cent handle. The AUD/USD entered offshore exchange at 0.8470 and continued lower briefly trading below 84 cents before bouncing back to open this morning back at 0.8470. Weaker than expected European data and comments from the U.S Federal Reserve bank weighed on the Aussie dollar ahead of today’s RBA interest rate announcement where the market is expecting the official cash rate to remain unchanged at 4.5%. Also scheduled for release today is the volatile yet closely monitored Retail Sales with analysts forecasting a slight increase from 0.3% to 0.4% in April.

- We expect a range today in the AUD/USD rate of 0.8400 to 0.8520

:: Great Britain Pound: With no economic data released and a Bank Holiday in the U.K the Pound Sterling was relatively stable overnight grinding up from 1.4480 to open this morning at 1.4530 against the Greenback. The U.S dollar weakened across the board following comments from Fed official Evans stating that the timing of any interest rate rises are likely to be pushed back following uncertainty surrounding the situation in Europe. The GBP/AUD cross rate pulled back from its overnight highs around 1.7300 and opens this morning at 1.7150 ahead of what is likely to be a volatile Asian trading day with several key Australian data releases the highlight of which is the RBA interest rate decision.

- We expect a range today in the GBP/AUD rate of 1.7075 to 1.7275

:: New Zealand Dollar: The Kiwi opened the week on a negative note yesterday pressing against 0.6750 USD following a less than impressive May NBNZ Business Confidence Survey. After grinding out some gains in Asia and peaking just shy of 0.6850 it was a somewhat volatile offshore session. Euro-zone inflation estimates came in just below expectations initially dragging the Euro and Kiwi lower however renewed Greenback selling late in the session triggered a recovery in NZD/USD from 0.6740 to this morning’s open at 68 cents. The AUD/NZD cross rate remains relatively stable exchanging at 1.2420 this morning however we do expect some volatility to emerge today on the back of key Australian data releases.

- We expect a range today in the NZD/USD rate of 0.6750 to 0.6850

:: Majors: USD/JPY rallied from a low of 90.90 in Asia yesterday to enter offshore trade on its highs around 91.60 following some disappointing Japanese economic data and a positive day on equity markets. Housing starts and Construction orders both came in well below expectations dampening enthusiasm for a recovery in the economy and weakening the currency. With the U.S markets closed for the Memorial Day holiday it was a relatively subdued offshore session with the majority of the moves coming during the European time-zone on the back of Euro-zone data. The May inflation estimate increased from 1.5% to 1.6% but was just short of analyst forecasts of a rise to 1.7% whilst as to be expected confidence on the European economy waned. The news saw EUR/USD dip to 1.2265 before bouncing back late in the session to open this morning hovering around 1.2300 whilst USD/JPY also gave back some of its Asian gains to open at 91.20. U.S Federal Reserve Bank member and President of the Bank of Chicago Charles Evans said expectations of a rate rise in America are likely to be “extended just a little bit” due to the European debt crisis and that it “adds uncertainty to the economic outlook”.

:: Data Releases:
AUD: RBA Announcement, Apr Retail Sales, Apr Building Approvals & May AiG Performance of Manufacturing Index
NZD: No Data Expected Today
USD: May ISM Manufacturing, May ISM Prices Paid & Apr Construction Spending
GBP: May Manufacturing PMI
EUR: Apr Euro-Zone Employment, Apr Manufacturing PMI & Apr German Retail Sales
JPY: May Vehicle Sales