Australian Dollar
The Australian dollar has held onto most of its gains since markets rallied on Friday; however caution ahead of some key risk events in the second half of this week has seen it dip back below 1.0500 in the early hours of Wednesday morning. Peaking near 1.0535 following much better than anticipated building approvals for the month of June, a pullback in sentiment surrounding crisis fighting plans in Europe sees the Aussie at 1.0490 this morning. Chinese manufacturing figures today have the potential to swing sentiment during local time and this evening all eyes will be on the US with the Fed meeting and some key US data on the agenda.

We expect a range today of 1.0430 – 1.0550

New Zealand Dollar
A survey by the National Bank of New Zealand showed business confidence conditions have improved over the month of July and along with the support of generally positive sentiment the Kiwi moved higher to touch highs near 0.8115 before doubt surrounding crisis fighting plans in Europe crept back into play. With three key central bank meetings lined up for the second half of the week, risk lies in potential disappointment should officials not deliver the level of stimulus being expected my market participants. On the cross rates, the past 24 hours has seen the NZD/EUR fall back slightly from recent highs and the NZD/AUD little changed at 0.7705.

We expect a range today of 0.8030 – 0.8140

Great British Pound
Sterling has fallen from its levels this time yesterday after Moody’s investment services cut its forecast for UK economic growth and also added the government will struggle to meet its debt-reduction targets. With consumer confidence also failing to improve over the past month Cable has felt the pressure, falling from earlier levels near 1.5730 to lows of 1.5630 before settling to open around 40 points off these lows. With speculation of stimulus from upcoming central bank meetings, the Aussie and Kiwi dollars have managed to post further gains against the weaker Pound and the cross rates trade at 1.4930 and 1.9380 respectively. Key to Sterling this evening is manufacturing PMI ahead of Thursday’s Bank of England meeting.

We expect a range today of 1.4860 – 1.5000

Majors
German resistance has taken some of the wind out of the Euro’s sails over the past 24 hours as German policy makers warn against the risks of ECB intervention in the bond markets as well as questioning the idea of granting Europe’s permanent bailout fund (the ESM) a banking licence. Nevertheless, the euro is trading higher than this time yesterday morning as speculation of central bank action on Thursday still outweighs any devil’s advocate moves by the Germans. Some disappointing unemployment and consumer spending figures did limit the gains in the shared currency however and it opens this morning right on the 1.2300 handle against the US Dollar. The Greenback faces its own central bank meeting tonight, with most of the belief the Fed will hold back any further stimulus measures until at least September when they will have two more months of key unemployment data to analyse- the first of which is due out this Friday. Slipping just slightly, the Greenback trades down at 78.10 against the Japanese Yen although it trades mixed against its riskier base currencies. Also on the calendar this evening for the USD, ahead of the FOMC statement, is ISM manufacturing PMI and ADP non-farm employment figures.

Data releases:

AUD: AIG Manufacturing Index; HPI q/q

NZD: No data due for release

JPY: No data due for release

GBP: Manufacturing PMI

EUR: Spanish/Italian Manufacturing PMI; EZ Final Manufacturing PMI

USD: ADP Non-Farm Employment Change; ISM Manufacturing PMI; FOMC Statement; Federal Funds Rate

CNY: Manufacturing PMI