Australian Dollar
Nervousness in the markets ahead of the EU summit has been offset by encouraging US fundamentals last night and the net effect on the Australian dollar was positive. Following a quiet onshore session where the Aussie traded between 1.0040 and 1.0065, short-term resistance at 1.0080 was put under pressure soon into New York hours. The barrier has proved solid thus far, despite being tested for most session and this morning it is here we still remain. HIA new home sales are due out this morning although it is likely the Aussie will be deriving most of its direction from developments in Europe this evening.

We expect a range today of 1.0020 – 1.0220

New Zealand Dollar
The New Zealand dollar weakened yesterday as the nation’s trade balance showed export volumes to be falling. Annualised figures showed the trade deficit to be the highest since November 2009 and the Kiwi dropped accordingly. Initially falling to 0.7890, uncertainty surrounding the EU summit and increasing Italian bond yields pushed the unit another ten pips lower before sentiment improved and the Kiwi rallied to open this morning at 0.7920. The AUD/NZD trades at 1.2725 (0.7859) this morning ahead of NBNZ business confidence figures to be released today; this evening sees Europe take the stage and sentiment will likely be a driving factor for the Kiwi offshore.

We expect a range today of 0.7880 – 0.7960

Great British Pound
A mixed selection of data has inevitably seen the Pound move lower overnight as a drop in mortgage approvals outweighed an increase in realized sales and many still speculate further quantitative easing will be on the BOE’s agenda next month. An economy that is still lagging on its own accord is also subject to pressure stemming from its ties to the indebted mainland; consequently Sterling finds itself lower at 1.5570 this morning ahead of current account figures and GDP this evening. Falling considerably against the Aussie and Kiwi dollars the GBP/AUD trades this morning at 1.5430 and GBP/NZD changes hands at 1.9650.

We expect a range today of 1.5360 – 1.5520

Majors
The Euro softened again yesterday, dipping again to lows of 1.2450 as concerns for the future of the euro-zone increase borrowing costs and yet another EU summit runs the risk of disappointing. The losses in the shared currency have been relatively subdued however, given some of the headlines coming out of Europe this week and this comes down to many market participants setting up their camping chairs on the sidelines, unwilling to take part in the game until the rules become a little clearer. The Greenback strengthened overnight however as growth in both core durable goods orders and pending home sales eased concerns regarding the US economic recovery, also supporting the Fed’s decision earlier in the month not to take a more aggressive stance on stimulus policy. Rallying against the Japanese Yen to 79.85 it was unable to push any higher and the safe-haven duo trade this morning just below 79.70. Retails sales from Japan are on the agenda this morning ahead of the headline act this week – the EU summit.

Data releases:

AUD: HIA New Home Sales m/m

NZD: NBNZ Business Confidence

JPY: Retail Sales y/y

GBP: Current Account; Final GDP q/q

EUR: EU Economic Summit; Italian 10-y Bond Auction

USD: Unemployment Claims; Final GDP q/q