Australian Dollar
Wednesday proved uneventful for the Aussie dollar as the up-tick in investor optimism following Spain’s successful bond auction on Tuesday, ran out of steam. The Aussie, having reached highs close to 1.0414 early on, banked to 1.0340 in US trading as investor appetite for risk slackened. Equity markets were dampened by weakening US tech stocks and with investor optimism coming off, the knock-on effect to currency markets and the AUD was inevitable. Looking to the day ahead NAB Quarterly Business Index figures, released today at 12.30 (AEST), could give the Aussie a boost if better than expected. With the market pricing in a rate cut by the RBA in May, the data will provide investors insight in to the overall state of Australian business confidence and conditions. With AUDUSD currently trading around 1.0360 we could see a move closer to the top of its current 1.02/1.04 range.

We expect a range today of 1.0310 – 1.0410

New Zealand Dollar
The New Zealand Dollar has slipped from yesterday’s open as global risk sentiment softened and world equity markets pull back. Depreciating 0.8% to find support at 0.8150 the Kiwi looks towards local CPI figures this morning in order to determine its move from here. With markets expecting a 0.6% increase in prices there is some downside risk assigned to the subsequent impact on monetary policy, as many speculate a low figure will mean the RBNZ will have little need to raise interest rates in 2012. Pressure has also been felt against the Australian dollar and pair sits below 79 cents this morning at 0.7875.

We expect a range today of 0.8120 – 0.8200

Great British Pound
The Great British Pound found the momentum it needed in local unemployment data, as well as an increasingly hawkish tone to the Bank of England monetary policy meeting minutes overnight. the claimant count increased by only 3,600, as opposed to the 6,600 increase the markets were expecting and this result contributed to the unexpected decrease in the unemployment rate to 8.3%. The key point that came out of the central bank’s last policy meeting was that Adam Posen, a previous advocate for further quantitative easing, changed his vote and ended his push for more easing. A spike higher first ran into resistance at the critical 1.6000 level however momentum and a pull back within the US equity markets allowed highs of 1.6030 to be reached before the close of North American trade. Gain flowed across to the cross rates and Sterling also sits higher against the Aussie and Kiwi at 1.5460 and 1.9620 respectively.

We expect a range today of 1.5380 – 1.5510

Majors
The Japanese Yen has weakened for a second consecutive day as Bank of Japan policy makers re-iterate their rhetoric of further monetary easing. Despite improved outlook for global growth the central bank have indicated they will consider easing measures aimed at assisting in achieving its 1% inflation target, and markets are well aware the next monetary policy meeting is scheduled to take place on the 27th April. USD/JPY moved higher to 9-day highs of 81.50, before settling later in the North American session to trade just above support at 81.20. In an otherwise quiet 24 hour period the Euro has remained in range-bound trade despite a brief dip to lows near 1.3050 as markets remain nervous ahead of a critical Spanish bond auction ahead this evening. Recovering to trade within the 1.3100/1.3140 band, as mentioned above all eyes will be on Spain tonight as well as US unemployment claims, existing home sales and manufacturing data from Philadelphia.

Data releases:

AUD: NAB Quarterly Business Confidence

NZD: CPI q/q

JPY: BOJ Gov Shirakawa Speaks

GBP: No data due for release

EUR: Spanish 10-y Bond Auction; Consumer Confidence

USD: Unemployment Claims; Existing Home Sales; Philly Fed Manufacturing Index