Australian Dollar:
The Australian dollar dropped immediately yesterday following a weaker than forecast domestic retail reading. Having opened the day at a rate of 1.0414 the Aussie dollar swiftly moved to a mid afternoon low of 1.0350 after figures showed Retail Sales fell by 0.2 percent in December, made even worse given the boost shopping season is meant to provide. With further hints the easing cycle from the RBA is set continue the higher yielding asset has come under some strong selling pressures this week dropping further overnight to a one month low of 1.0295. On the outlook today labour market figures should they disappoint may act as a catalyst for a further shift downward with an interest rate announcement from the ECB also likely to be closely watched. This morning the Aussie is trading at 1.0316

We expect a range today of 1.0270 – 1.0340

New Zealand Dollar
Given the Bank Holiday locally yesterday it was a lacklustre session for the New Zealand dollar which this morning opens flat clinging to levels just above the 84 US Cents mark. Whilst the recent rally in global equities overnight did halt the influence on broader risk sentiment was minimal as investors look towards Central Bank meetings being held this evening in broader Europe and the UK. Also of key importance for the New Zealand dollar today is the release of labour market figures which are expected to show the unemployment rate having dropped from 7.3% to 7.1%.

We expect a range today of 0.8390 – 0.8450

Great British Pound:
Having consistently fallen in the early parts of this week, there has been a hint of speculation suggesting the weakness witnessed in the Sterling may have gone too far. Whilst hope remains incoming Bank of England Governor Mark Carney will boost the economy through additional stimulus when he comes to power in July economists aren’t expecting any change in Policy when the BOE meet this evening. Having traded between a 24 hour range of (1.5630 – 1.5672) against its US Counterpart the Great British Pound is stronger this morning at 1.5664. A quick look at the cross-rate also reveals a notably stronger Sterling against both the Aussie (1.5183) and the Kiwi (1.8589)

We expect a range today of 1.5150 – 1.5200

Majors:
Markets to a large degree stopped to catch their breath overnight with very little in the form of economic data being released to provide direction. In a distinct shift south yesterday the Euro has continued to soften from its 14 month highs witnessed earlier in the week reaching a low of 1.3492. With the shine coming off global stocks overnight European Union Leaders are a set to start a two-day meeting this evening where an agreement on the bloc’s next budget will be high on the agenda. Keeping in mind the ECB also meets, despite the strong likelihood there will be no change in interest rates comments from Policy Makers will be closely scrutinised especially those suggesting a stronger Euro only restrains recovery efforts in nations such like Spain. In other news the Japanese Yen continued to be sold quickly and in large volumes overnight with the surprise early resignation of BOJ Governor Skirakawa adding to speculation a more dovish leader will be appointed sooner rather than later in an attempt to push ahead with aggressive inflationary targets.

Data releases

AUD:
Unemployment rate

NZD: Unemployment rate

JPY:
Core Machinery Orders m/m, Leading Indicators

GBP: Manufacturing Production m/m

EUR:
EU Economic Summit, German Industrial Production, French 10-y Bond Auction, Minimum Bid Rate, ECB Press Conference

USD:
Unemployment Claims, Prelim Unit Labour Costs q/q, Prelim Nonfarm productivity q/q. FOMC Member Stein Speaks