Australian Dollar
After opening the week near 1.0640, the Australian Dollar fell by 0.6% during Asian trade as speculation surrounding Chinese monetary policy weakened the local unit. With China’s central bank holding off on decreasing the amount of money banks must hold in reserve, the Aussie fell as markets were hoping the expected decrease would free up more cash to support demand for our commodities. With risk aversion continuing into the European and North American sessions as well as Fitch placing Australia’s big 4 banks on ratings watch negative, the Australian Dollar continued lower to eventually find some intraday support at 1.0530. Paring a degree of these losses we open this morning at 1.0590 with NAB Business Confidence and Private Sector Credit m/m on the local calendar today.

We expect a range today of 1.0540 – 1.0640

New Zealand Dollar
The New Zealand Dollar has fallen against the Greenback and the Japanese Yen as talks between Greece and its bondholders made little to no progress overnight. After starting the week at 0.8230 the Kiwi first slipped lower in its local session after China’s central bank failed to loosen its monetary policy as expected. Commodity exporting countries such as New Zealand saw their currencies depreciate as speculation circled this would reduce demand for exports. Falling to 0.8200 by the switch to London hours, the Kiwi continued lower as developments in Europe added little to lift the mood. After reaching lows of 0.8160 we open this morning at 0.8190 ahead of Building Consents for the month of December. Trade on the Australian Dollar cross saw the Kiwi rally earlier above 0.7760 however fall back to similar opening levels this morning of 0.7735.

We expect a range today of 0.8120 – 0.8220

Great British Pound
In a day where the local economic calendar held nothing of note, Pound Sterling was subject to the weakening risk aversion that began during the Asian session. Opening levels of 1.5730 were not seen for long and by the switch to local hours Cable had consolidated lower towards the 1.5700 handle. With risk aversion heightening after a disappointing Italian bond auction and speculation towards the idea Greece may require a larger bailout package sent the Pound to 1.5655as the Greenback benefitted from safe-haven flows. Finding support at these intraday lows, Sterling opens today back towards the 1.5700 mark with Consumer Confidence figures due for release today.

We expect a range today of 1.4740 - 1.4940

Majors
Italy held its first bond auction since the country was downgraded by Fitch last Friday and it fell short of its maximum target. Selling 7.5 billion Euros of 5 to 10 year bonds left investors feeling uneasy and along with speculation Greece will require a larger bailout package and Spain’s economy contracting 0.3%, markets took on a risk adverse tone. The Japanese Yen rallied against most of its major counterparts, the Euro falling very briefly below 100 yen and the Greenback falling near 76.20. Although the Japanese remained the main beneficiary of safe-haven retreats, the Greenback also succeeded in gaining ground against its riskier trading partners after income and spending data from the world’s largest economy showed consumers were saving more than spending, even in the month of December. From start of trade on Monday the Euro fell over 1.0% to lows of 1.3080. It opens this morning at 1.3120 with a basket of fundamental releases expected from Europe and the US, not to mention ongoing talks in Europe.

Data releases:

AUD: NAB Business Confidence; Private Sector Credit m/m

NZD: Building Consents m/m

JPY: Manufacturing PMI; Household Spending; Unemployment Rate; Prelim Industrial Production

GBP: GfK Consumer Confidence; Net Lending to Individuals m/m

EUR: German Retail Sales m/m; French Consumer Spending m/m; Unemployment Rate

USD: CB Consumer Confidence; Chicago PMI; S&P/CS Composite-20 HPI