Australian Dollar
The Australian dollar tumbled yesterday after weaker than expected retail sales increased bets that the Reserve Bank of Australia will cut interest rates further next week. Given the decline of 0.2 percent for the month of April, the RBA are likely to maintain their downward bias in the coming months in an attempt to remain ahead of the game. Falling to an overnight low of 0.9701 against its US Counterpart investors shed risk across the board as Spanish and Italian Bond-yields surged amongst weaker than expected new home sale figures in the US. Opening this morning a staggering one and half cents lower, the Australian dollar is struggling to keep its head above water and with sovereign debt concerns out Europe again at the forefront of investors’ minds, critical support levels aren’t seen until the 0.9650 area.

We expect a range today of 0.9650 – 0.9750

New Zealand Dollar
The New Zealand dollar fell and fell hard yesterday as concern about Spain’s banking crisis escalated. Whilst Spanish officials debated how to best rescue the highly indebted Bankia Group, commodities as well as global equities followed suit all trading well down. Sapping demand for all assets deemed riskier in nature the New Zealand dollar lost some serious ground against its US Counterpart trading to overnight low of 0.7525. Failing to recover any of its losses over the course of the past 24 hours the Kiwi opens this morning a full cent weaker at a rate of 0.7531. Looking ahead for the remainder of the week US Prelim GDP as well non-farm payrolls out of the US are likely to provide substantial volatilities for the higher yielding currency as the health of Spanish banks is likely to see days of uncertainty ahead.

We expect a range today of 0.7460 – 0.7580

Great British Pound
Despite mortgage approvals which rose in April, well supported by record-low interest rates, a slight improvement within the housing market has down little to help the prospects of a struggling Great British Pound. Heavily weighed down amid euro-area debt concerns the Sterling was sold across the board yesterday. After trading between a 24 hour range of (1.5474 – 1.5642) against its US Counterpart it opens noticeably lower this morning at a rate of 1.5479. With borrowing costs in both Spain and Italy growing, contagion fears also gripped equity markets as the FTSE tumbled 1.7 percent. Despite the extended sell off of the Sterling overnight there was some consolidation for Britain’s currency as its performance outstripped that of both the Australian and New Zealand dollar which both open stronger this morning at a rate of 1.5945 and 2.0546 respectively

We expect a range today of 1.5900 – 1.6000

Majors:
As the stalemate throughout Europe continued, a lack of political co-hesion continued to hurt markets overnight. With the European Central Bank effectively rejecting Spain’s plan to recapitalize the state owned Bankia Group, the European Commission has called for direct euro-aid for troubled banks stating the permanent euro bailout fund should be used to inject funds to national banks not just national governments. Further fuelling the sell-off overnight Spanish bond yields surged whilst an Italian 10-year bond auction struggled to attract any solid demand. In what is proving to be a tumultuous week for investors the 17-nation Euro lost further ground overnight trading to a 2-year low of 1.2367 against its US Counterpart. Given the mounting concerns over Europe’s debt crisis, direction continues to be driven by fear with the EU seemingly unable to move forward in mutual agreement. Keeping in mind the woes of Europe, pending home sales in the world’s largest economy also disappointed traders overnight as key Data releases lie ahead in the form of non-farm payrolls which are due for release tomorrow evening. Meanwhile this morning it was no surprise to see the Greenback strengthen against a handful of its major counterparties opening stronger against the Japanese Yen at a rate of 79.065

Data releases

AUD:
Building Approvals m/m, Private Capital Expenditure q/q, Private Sector Credit m/m

NZD: NBNZ Business Confidence

JPY:
Average Cash Earnings y/y, Housing Starts y/y

GBP: Nationwide HPI m/m

EUR:
German Retail Sales m/m, French Consumer Spending m/m, German unemployment change, Italian Prelim CPI m/m

USD:
Challenger Job Cuts m/m, ADP Non-Farm Employment Change, Prelim GDP q/q, Unemployment Claims, Chicago PMI