Australian Dollar:
The Australian dollar received a boost yesterday after data revealed China’s Trade Surplus surged to 31.6 Billion in December. With exports rising by 14.1 percent, the fastest pace in seven months, the response of the Australian dollar comes as no surprise given what such news means for Australia’s export and commodity prices. Reaching intraday highs around 1.0550, the immediate half a cent rise was further consolidated as the higher yielding asset entered the offshore session. Adding to the positive feel around markets overnight ECB President Mario Draghi also chimed in by stating that he expected the euro zone economy to recover late in 2013 given the recent signs of stabilization. In what has been a momentous 24 hours the Australian dollar opens stronger pushing towards upper resistance at the 1.06 level currently swapping hands at a rate of 1.0595 against its US Counterpart.

We expect a range today of 1.0560 – 1.0620

New Zealand Dollar
In a positive sign that the world’s second largest economy is recovering at a quicker than expected pace global markets were bid across the board yesterday after Trade data from China showed a substantial improvement in both import and export numbers. Driving the commodity backed currency to an overnight high of 0.8453 against the Greenback the Kiwi opens comfortably half a cent stronger this morning at 0.8440. Despite its solid performance against the US Dollar the Kiwi is weaker against the Euro this morning unable keep pace with the shared unit following the ECB’s decision to keep interest rates on hold whilst also echoing a positive rhetoric. Meanwhile the EUR/NZD is currently trading half a cent weaker at 0.6429

We expect a range today of 0.8410 – 0.8460

Great British Pound:
Bank of England Policy Makers led by Governor Mervyn King kept the target for quantitative easing at 375 billion pounds overnight as well maintaining the underlying cash rate at 0.50%. In a move which was widely expected further stimulus may be warranted later this year should the UK’s recovery fail to gain traction. Whilst there were no surprises from the BOE, encouraging data flows from China along with positive comments out the ECB have both buoyed global markets resulting in a significantly stronger Great British Pound. Rallying by more than a full cent the Sterling is stronger against the Greenback (1.6151), the Kiwi (1.9124) however against flat the Aussie (1.5244).

We expect a range today of 1.5210 – 1.5270

Majors:
General risk sentiment favoured a handful of currencies yesterday after news of stronger than expected Chinese exports raised hopes that the world’s second largest economy is in better health than previously forecast. Whilst the Japanese Yen continued to weaken against the Greenback amid ongoing speculation the BOJ will add further stimulus when they next meet on Jan 21, the JPY was the exception with several key major units bolstered following the release of Chinese trade numbers. Adding to the positive feel across markets both the BOE and ECB left their underlying cash rates on hold at 0.5% and 0.75% respectively with comments from ECB president Mario Draghi garnishing substantial attention from market participants after he talked up the hopes of a gradual economic recovery in 2013 amid signs that broader bond markets have started to normalise. Whilst the Euro has jumped almost one and half cents to open stronger this morning at 1.3252 many still believe it’s a little premature to be claiming success given both Greece and Spain both remain in bailout programs.

Data releases

AUD:
No data today

NZD: No data today

JPY:
Current Account, Bank Lending y/y

GBP: Manufacturing Production m/m, Industrial Production m/m, NIESR GDP Estimate

EUR:
Italian 10-yr bond auction

USD:
Trade Balance, Import Prices m/m, Federal Budget Balance

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