Australian Dollar
The Australian Dollar initially fell yesterday after reports out of China showed inflation for Australia’s largest trading partner accelerated to 4.5 percent, well above forecast. Prompting a brief bout of profit taking the Australian Dollar managed to drop as low as 1.0737 against its US Counterpart in mid-afternoon trade with higher-Chinese inflation potentially leading to a tighter monetary stance. As the Australian Dollar entered the offshore session, earlier losses were erased with Greek political leaders agreeing to austerity terms which saw the Aussie trade as high 1.0823. Looking ahead today there appears some well established resistance formed around the 1.0820 handle with the local unit having touched that level 3 times in as many days, opening this morning at a rate of 1.0789, the key risk event lies within the release of Monetary Policy minutes from the RBA’s most recent meeting due for release today at 11:30am AEDT.

We expect a range today of 1.0730 – 1.0820

New Zealand Dollar
In Local Data released New Zealand’s unemployment rate for the December quarter unexpectedly fell yesterday with figures showing a drop in the official unemployment rate from 6.5 percent down to 6.3 percent. Statistics showed there were 7000 fewer people unemployed in the December quarter which offered some minor support New Zealand’s currency which gained ground against its US Counterpart trading to an overnight high of 0.8377. Given global shares advanced and the fact Greek leaders have finally agreed on austerity reforms current levels above 0.8280 appear well supported. With ranges certainly tightening over the course of this week the New Zealand Dollar opens only marginally stronger this morning currently buying 83.45 US Cents.

We expect a range today of 0.8310 – 0.8390

Great British Pound
In a very busy session for Britain’s economy yesterday Bank of England officials announced their decision to add a further 50 billion pounds of stimulus into the UK economy in an effort to the protect the increasingly fragile economy from the significant threats posed by Europe’s debt crisis. The stimulus expansion emphasises the very real concerns surrounding growth, as the Central Bank also made the decision to hold the official cash rate at a record low of 0.5 percent. Whilst such a policy stance has been on the table for quite some time the Sterling did receive some support yesterday in the form of better than expected Industrial and Manufacturing Production figures which both exceeded expectation. Trading between a 24 hour range of (1.5792-1.5884) against its US Counterpart the Great British Pound opens marginally stronger than where we saw it yesterday currently trading at a rate of 1.5824.

We expect a range today of 1.4600 – 1.4730

Majors
 European Stocks rose overnight after Greek Leaders finally agreed to reforms on austerity measures needed to secure a second rescue package and avoid default on its existing debt payments. Whilst an agreement was reached out of Athens the market’s reaction was relatively muted given the financial package still needs to be ratified by European Financial Leaders this evening in Brussels where powerbrokers are set to meet. In an overall positive session for the Euro, the ECB also meet overnight which saw the Central Bank keep the official cash rate unchanged at 1 percent. Whilst ECB President Mario Draghi did state the economic outlook for the 17-Nation region remains subject to high uncertainty and downside risk, he did remain tight lipped when questioned on the Central Banks intentions to help Greece reduce its debt. In a very busy 24 hours the EURO did manage to find some upside against its US Counterpart, briefly touching a 2 month high of 1.3321 as it opens noticeably stronger this morning at a rate of 1.3289. Meanwhile jumping briefly across to the US, in further signs the US Labour Market is also stabilizing weekly unemployment claims came in well below expectation helping the Greenback sustain its recent appreciation against the Japanese Yen as it opens firmly above the 77.50 handle, currently swapping hands at a rate of 77.620.

Data releases

AUD:
RBA Monetary Policy Statement

NZD: No data today

JPY:
CGPI y/y

GBP: PPI Input m/m, PPI Output m/m

EUR:
German Final CPI m/m, French Industrial Production m/m, Italian Industrial Production m/m

USD:
Unemployment Claims, Trade Balance, Prelim UoM Consumer Sentiment, Prelim UoM Inflation expectations, Fed Chairman Bernanke Speaks, Federal Budget Balance