Australian Dollar
Comments made by Chinese Premier Wen Jiabao lifted the Australian Dollar during local hours yesterday, the Premier confirming China pledges to focus more on boosting economic growth. The positive flow on effect for the Australian economy helped lift an otherwise struggling Australian dollar, from support near 0.9800 to break 0.9860 by lunchtime. Dipping back twice towards 0.9820, a short-covering market took a leap higher when US equities decided to take on Monday with a vengeance. This relief rally after nearly two weeks of red sees the Aussie trading above 99 cents this morning at 0.9910 and still at the mercy of risk sentiment.

We expect a range today of 0.9860 – 0.9950

New Zealand Dollar
Negative sentiment in the markets eased during this week’s first day of trade as words from the G8 and China point towards a focus on global growth. Commodity prices received a boost and so did the New Zealand Dollar, rallying towards 0.7650 by late in the North American session and sitting just below this level this morning. Today holds a local risk event in the form of inflation expectations due out at 1pm as well as the usual dictation of direction by offshore developments. Outperforming the Australian Dollar, the cross rate has eased off levels above 1.3000 and trades at 1.2950 (0.7722) at time of writing.

We expect a range today of 0.7610 – 0.7700

Great British Pound
Sterling maintained a lift from two month lows against the Greenback on Monday as recently bearish markets took a breather on signs people in power acknowledge the need for stimulating economic growth, rather than pure austerity. Holding for the most part above 1.5800, a late boost in the North American session sees Cable sitting at 1.5825 this morning. A heavy hitting calendar for the UK leaves the Pound at the mercy of CPI and public sector borrowing figures tonight as well as the scheduled Bank of England Inflation letter. The recent relief rally in sentiment positions the GBP/AUD at 1.5960 and GBP/NZD at 2.0670 ahead of this.

We expect a range today of 1.5880 – 1.6020

Majors
After near two weeks of risk aversion and US Dollar gains, the markets have begun this week on slightly firmer ground. Noises from the G8 about boosting economic growth combined with words conducive to a similar theme from Chinese Premier Wen Jiabao helped the Euro poke its nose through 1.2800 for the first time in nearly a week. Faltering at first, the single currency unit fell back to 1.2735 however Wall Street took on Monday with gusto and in doing so lifted risky assets across the board. The safe haven Japanese Yen faced a double-edged sword yesterday, not only a recovery in sentiment but noises from its own central bank hinted policy makers would be stepping in this week to weaken the Yen and boost local growth. The central bank is due to meet for its monthly policy meeting on Wednesday. Opening levels this morning have the Euro trading at 1.2810 against the Greenback and the Yen is selling at 79.30 per dollar. Apart from swings in sentiment markets will be keeping a close eye on tonight’s existing home sales data out of the US.

Data releases:

AUD: No data due for release

NZD: Inflation Expectations q/q

JPY: No data due for release

GBP: CPI y/y; Public Sector Net Borrowing; BOE Inflation Letter

EUR: Consumer Confidence

USD: Existing Home Sales; Richmond Manufacturing Index