Australian Dollar
A surprise to the upside in Australia’s unemployment rate sparked a brief rally in the local unit in a session that was otherwise dominated by a risk-off mode. A report by the Australian Bureau of Statistics showed the number of employed people during January to increase by 46,300, pushing the unemployment rate to 5.1% and the Aussie Dollar to 1.0730. Positive local news was ultimately not enough to sway overall market sentiment and ongoing jitters surrounding Greece sent the Aussie to find support at 1.0650. Moves by the European Central Bank overnight however raised hopes that Greece would indeed secure its next bailout package, and combined with encouraging US fundamental data, risk sentiment took a turn for the better. Opening this morning at 1.0750, an absence of local data means the Australian Dollar is set to trade in line with investor appetite for the remainder of the week.

We expect a range today of 1.0680 – 1.0780

New Zealand Dollar
The New Zealand Dollar is once again caught in the tide of risk sentiment, with the only local data release Business NZ Manufacturing Index failing to create a ripple in the markets. The private survey, that reports the level of business conditions from the perspective of manufacturers, posted a reading of 50.5 which just above the benchmark of 50 which indicates expansion in the sector. Nervousness surrounding Greek debt overtook the Kiwi’s direction and intraday lows were reached of 0.8250. Better than expected jobless claims and manufacturing results from the US helped salvage risk appetite and the New Zealand Dollar opens stronger this morning at 0.8330 against the Greenback. A reduction in Australian unemployment has sent the Kiwi lower against its rival from across the Tasman, the pair opening today at 1.2900 (0.7752).

We expect a range today of0.8260 – 0.8360

Great British Pound
Sterling has broken free from it channel resistance overnight after it was reported UK consumer confidence hit a five month high in the month of January. A survey conducted by Nationwide showed a 9 point increase to 47 from December’s 38. The Pound, weighed by risk aversion, failed to capitalise on the information initially however once markets turned around it shot higher to levels above 1.5800. Opening this morning, holding just above this psychological barrier, markets look to Retail Sales figures this evening for further direction. A decrease in the Australian unemployment rate means the Pound trades only slightly higher against the Aussie at 1.4690 although some ground has been made against the Kiwi and it trades at 1.8960.

We expect a range today of 1.4620 – 1.4770

Majors
The Euro has broken higher overnight after subdued risk sentiment kept the single currency under pressure for most of the day. Not before falling below the 1.3000 mark to lows of 1.2980, a combination of Greek developments and US fundamentals worked together push the risk switch back to the ‘ON’ position. Helping the Euro gain 1.2% was a move by the European Central Bank (ECB) to swap maturing Greek bonds with new securities, raising market hopes that Greece will indeed secure its next bailout. It has been reported however that the move is aimed at protecting the ECB from forced bond write-downs as the new securities contain a clause exempting them from any legal action by Athens to impose losses. Still, this move should make it easier for the central bank to put its profits towards assisting Greece, and markets rallied along with encouraging data from the United States. First–time jobless claims fell by 13,000 to its lowest level since March 2008 and the Philly Fed Manufacturing Index reported a sharp increase to 10.2 and its fastest pace in four months. Opening this morning, the Euro has hit resistance at 1.3150 and trades just below here and the USD/JPY has moved higher once again to levels above 78.90.

Data releases:

AUD: No data due for release

NZD: No data due for release

JPY: Monetary Policy Meeting Minutes

GBP: Retail Sales m/m

EUR: German PPI m/m; Current Account

USD: Core CPI m/m; CPI m/m