Australian Dollar
A subsiding of recent risk aversion has boosted the Australian Dollar over the past 24 hours, as rumours circulate the European Central Bank may look to purchase Spanish bonds and the beginning of earnings season in the United States supports equity markets. The local unit was relatively unaffected following a small decrease in consumer sentiment as reported by Westpac and a 2.5% drop in home loans granted in the month of March, trading higher instead throughout the day as risk sentiment increased across the board. Morning lows of 1.0225 were soon in the rear-view mirror and a steady rally saw almost a full cent gain by North American trade, despite the usual consolidation patterns we remain around 1.0300 this morning ahead of unemployment data this morning.

We expect a range today of 1.0250 – 1.0350

New Zealand Dollar
New Zealand businesses reported their most optimistic views on the economic environment since June 2011, it was announced yesterday, with the NZIER Business Confidence Index reading an impressive 13 in contrast to the very non-committal 0 from the month before. Helped along by a turnaround in recent risk aversion, the New Zealand dollar rallied throughout the local session, hitting 0.8170 by the switch to offshore trade and continuing to break 0.8200 by early New York hours. Consolidation of gains meant the break above the 82 cent handle was short and sweet and this morning the pair open at 0.8180. Trade against the Australian dollar and moved in a tight range although this morning sees the Aussie marginally higher than this time yesterday at 1.2590 (0.7943).

We expect a range today of 0.8140 – 0.8230

Great British Pound
Sterling recovered to Tuesday’s levels above 1.5920 yesterday after an industry report showed UK retail sales increased in March by 1.3%. Also supported by a weaker Greenback, the Pound moved higher from morning lows near 1.5850 in the Asian session, reaching its peak by its own local hours. The Office for National Statistics are due to release trade balance figures this evening, where markets are predicting to see the deficit rise by 0.2 billion to 7.7 billion Pounds. Trade on the antipodean cross rates has been driven by risk sentiment over the past 24 hours and with investors feeling slightly more positive Sterling trades lower against the Aussie and Kiwi at 1.5435 and 1.9440 respectively.

We expect a range today of 1.5350 – 1.5490

Majors
The Euro recovered from four week lows against the Greenback and seven week lows against the Japanese Yen as speculation mounted the European Central Bank may step in and purchase Spanish bonds, a move that would be aimed at lowering the borrowing costs of the indebted nation. In addition with a fully subscribed Italian bond auction overnight, both countries 10 year debt dropped at least 10 basis points relieving risk aversion in the markets. Rallying to 1.3150, profit-taking and warnings by rating agency Fitch pertaining to funding fears for Spanish banks sent the single currency lower, settling to open trade today at 1.3100/10. Speculation the Bank of Japan may step in and further ease monetary policy later this month by expanding bond purchases and ensuring greater liquidity is available to the economy. USD/JPY has moved up off lows of 80.60, briefly moving above 81.00 however opening this morning at 80.85.

Data releases:

AUD: Employment Change; Unemployment Rate; MI Inflation Expectations

NZD: Business NZ Manufacturing Index

JPY: CGPI y/y; M2 Money Stock y/y

GBP: Trade Balance

EUR: French CPI m/m; Industrial Production m/m; ECB Monthly Bulletin

USD: PPI m/m; Trade Balance; Unemployment Claims