Australian Dollar:
The Aussie managed to claw back some of its post-Cyprus-bailout losses last night after the initial shock dissipated, managing to break back above 1.04. Gains were limited above this big figure however and we are now trading sideways, with investors likely holding below recent highs until the release of the RBA minutes later today. At their previous meeting the RBA decided to leave rates on hold, but the accompanying comments was the main surprise, providing a more upbeat view, particularly on the non-mining sector and investors will be looking for more detail on these comments to perhaps push the Aussie higher. Meanwhile in some minor data yesterday, new motor vehicle sales came in flat in February, meaning yearly figures saw a gain of 9.4%. We open this morning trading just above 1.04 against the USD, while AUD/EUR remains strong, still trading above 0.80 after recent falls in the Euro.

We expect a range today of 1.0375 – 1.0435

New Zealand Dollar:
The Kiwi, like other risk related currencies, has managed to recover somewhat from yesterday’s shock to the system. The bailout in Cyprus continues to dominate headlines but after reaching lows of around 0.8220 yesterday, we have now moved back towards 0.8265 against our US counterpart but still short of Friday’s high near 0.8280. Investors seem to be hoping that the terms of the bailout and in particular which depositors will be hit, will be watered down somewhat over coming days; while there is also hope that comments from European leaders that ‘Cyprus is a special case’ can be believed. There is minimal data out today locally but the RBA minutes across the Tasman may provide some direction with AUD/NZD temporarily getting over 1.2600 overnight and still looking strong after last week’s strong Australian employment numbers and dovish RBNZ comments.

We expect a range today of 0.8240 – 0.8295

Great British Pound:
The pound opens this morning little changed from yesterday at 1.5110 against its US counterpart, having been left out of the Cyprus trade both on the initial downside and now the recovery. With EUR/USD recovering back through 1.29 during US trade, EUR/GBP has also moved up towards 0.8580. In local data last night, UK Rightmove house prices rose 1.7% for March but this was lower than last month’s rise of 2.8%. Meanwhile tonight is shaping up to be a busy one with UK inflation data and Producer price index likely to provide the next round of direction for the currency, with any inflation number greater than 2.8% likely to send the cable through 1.5150. On the south pacific crosses meanwhile, the pound has fallen against a recovering Aussie (1.4525) and Kiwi (1.8280).

We expect a range today of 1.4480 – 1.4590

Majors:

While the Cyprus bailout continues to dominate headlines, the selloff in riskier currencies seems to have halted for the time being with EUR/USD reaching its lows during the Asian session and eventually climbing back up to this morning’s open of 1.2960. The fall in equities that were seen across Asian markets followed through to European and North American markets but the losses in the currency markets had already run their course and began stabilising during offshore trade. An agreement has yet to be finalised though, with the Cyprus’ central bank announcing banks will remain closed until at least Thursday and Eurozone leaders and the Cypriot government discussing possible changes to the levy plan. Commentators continue to weigh in on what the flow on affects could be for other peripheral countries, while Russia has also expressed their dissatisfaction with the terms of the bailout (no surprise given its citizens and many of its corporates are some of the largest depositors of Cyprus’ banks), they have in tern been pressured to extend their loans to Cyprus for another five years with reduced interest rates. Elsewhere there was some minor US and European data that was basically ignored with NAHB US housing index falling to 44 and Eurozone trade surplus narrowing to 9 billion. Attention should soon turn to the upcoming FOMC meeting on Wednesday night.

Data releases:

AUD:
RBA March minutes

NZD:
No data today

JPY:
BOJ Governor stepping down, Leading index, Department store sales

GBP:
Producer price index, Consumer price index

EUR:
New car registrations, Construction output, German ZEW, Eurozone ZEW

USD:
Housing starts, Building permits