Australian Dollar
The Australian Dollar has managed to maintain the gains witnessed in the early parts of this week as US Markets returned to action overnight. Having been tested briefly around 98 US Cents in early morning trade yesterday the Aussie dollar recovered nicely for the remainder of the session, well supported by better than expected new home sales for the month of April. Having reached an overnight high of 0.9896 against its US Counterpart investor’s appear happy to buy the higher yielding asset on any declines. Despite signs of a stabilising housing market locally, Spain’s underlying debt as well as the approaching Greek election continues to provide plenty of jitters in an already unstable market. Opening this morning at a rate of 0.9842 Retails Sales due for release at 11:30am this morning remain a key risk event for the Aussie Unit.

We expect a range today of 0.9790 – 0.9880

New Zealand Dollar
Having actually lost ground in a sluggish start to the day the New Zealand dollar opens stronger this morning, currently swapping hands at a rate of 0.7619 against its US Counterpart. In what was an overall unconvincing session for the higher yielding asset the New Zealand dollar swapped losses for gains, as it bounced 30 basis points either side of the 76 US Cents level overnight. With US equity markets returning their first weekly gains since April, markets continued to trade in positive territory off that back of easing concerns that Greece will exit the Euro after Polls showed the nation’s pro-bailout party remained favourite to be elected. Looking ahead for the remainder of the week in the absence of any local data to provide any real support, direction is again likely to be dictated by overall risk sentiment with Euro-zone wires set to dominate proceedings.

We expect a range today of 0.7580 – 0.7680

Great British Pound
An index of British retails sales climbed to its highest level in more than a year for the month of May as the Sterling traded close to a three-and-a-half year high against the Euro. Whilst the Sterling continues to be sold off the back of concerns out of both Spain and Greece its appreciation against the Euro still demonstrates its relative strength in comparison as the Bank of England remain reluctant to provide any further stimulus despite a string of discouraging numbers which have filtered through over the last month. Falling to an overnight low of 1.5607 against its US Counterpart the Sterling opens around 40 basis points weaker this morning at a rate of 1.5638. A quick look at the cross rates also reveals a similar story as the Great British Pound slid against both the Aussie (1.5878) and the Kiwi (2.0503) which both open weaker.

We expect a range today of 1.5820 – 1.5930

Majors:
US Markets returned to work overnight with US Stocks trading well into positive territory. Despite US Consumer Confidence figures which came in well below expectation, the majority of trades were again dictated by news out of Greece earlier in the week that opinion polls are showing support for political parties backing austerity ahead of a Euro-exit. In what has been a generally mixed past 24 hours Spain’s government has backtracked on its recapitalisation plans for the recently nationalised Bankia SA after the Spanish PM made a plea for the ailing bank to tap into European Financial Stability funds directly. With the fragility of Spain’s banking system spooking investors, it’s interesting to note that whilst Greece only lay claim to 0.4 percent of the world economy, extensive trade and financial ties do raise concerns over highly indebted nations such as Spain and their ability to cope with any further flare ups. In another ordinary day of trade the Euro has breached the 1.25 level against its US Counterpart trading to an overnight low of 1.2460, close to a 2 year low. Given Greenback strength remains the overriding theme the market remains tentative ahead of the all important US Unemployment figures due for release Friday.

Data releases

AUD:
Retail Sales m/m

NZD: Building Consents m/m

JPY:
BOJ Gov Shirakawa Speaks

GBP: Net Lending to individual’s m/m

EUR:
Italian 10-yr bond auction, ECB President Draghi speaks

USD:
Pending Home Sales m/, FOMC Member Dudley speaks,