Australian Dollar
The Australian Dollar drifted marginally higher during the Asian session as a lack of local data enabled recent risk appetite to remain in play. Trading most of the morning in a 10 point range above support at 1.0350, as the day wore on 1.0370 was challenged before moving offshore where rallying US equity markets lifted risk assets higher. Determinedly trying to break 1.0400, the Aussie was unsuccessful and after falling just short it has fallen back slightly to start Friday trade on short-term support at 1.0370. Direction for the Australian dollar into the end of the week will likely be taken from the BOJ monetary policy meeting, where additional stimulus could serve to support risk appetite, as well as US GDP figures out tonight.

We expect a range today of 1.0330 – 1.0420

New Zealand Dollar
Following the Reserve Bank of New Zealand’s interest rate hold early yesterday, the local currency settled back to test support at 0.8140 as markets contemplated the possibility a rate rise would not be seen until 2013. With improved risk sentiment directing markets, this support held and for the rest of the local session the Kiwi moved tentatively higher towards 0.8160. Continuing higher into the European morning, a high of 0.8180 was reached before momentum faltered. A strong session for US equity markets helped the Kiwi retest 0.8160 however it has slipped to trade this morning off support at 0.8130. Looking at the Aussie cross rate, the Kiwi has been outperformed overnight and the pair sits this morning at 1.2750 (0.7843).

We expect a range today of 0.8080 – 0.8170

Great British Pound
Consumer sentiment in the United Kingdom rose to a nine month high in March, according to a survey conducted by Nationwide, with people becoming less concerned with the jobs market and more willing to spend their cash. Markets still remain concerned however, regarding the recent GDP figures and thus the Pound traded in a narrow range against the Greenback in the hours after the release. Weakness in the Greenback and stronger equity markets has helped the Pound chip further away at the 1.6167 resistance level set by October 2011 highs. Breaking through to touch 1.6200 was an encouraging sign for the pair, although it has slipped lower this morning to 1.6175. Whether Cable closes this week above or below 1.6170 could be critical to its direction going forward. Looking at the antipodean cross rates, the GBP/AUD has traded sideways and currently sits at 1.5600; the GBP/NZD has gained marginally to 1.9890.

We expect a range today of 1.5550 – 1.5680

Majors
Greenback weakness has remained the theme following Thursday’s FOMC monthly meeting. Markets were seemingly disappointed that Bernanke was not yet willing to rule out further easing measures completely and thus the US dollar has faltered accordingly. USD/JPY fell to one week lows of 80.66 before recovering to levels barely above 81.00 as investors remember the BOJ meeting scheduled for later today. Markets are widely expecting to see further stimulus measures from the Japanese central bank which if eventuate will serve to weaken the Yen. Despite weakness in European bank stocks, which highlights ongoing nervousness surrounding the debt crisis, the Euro dollar fought its way to levels near 1.3250 before falling back towards 1.3200 this morning. A marginal drop in unemployment claims and an impressive 4.1% increase in pending home sales did lend support to the US recovery and equity markets rallied as a result. As well as the aforementioned BOJ meeting during Asian hours today, we also await US GDP figures scheduled for release tonight.

Data releases:

AUD: No data due for release

NZD: No data due for release

JPY: Monetary Policy Statement; Overnight Call Rate; Prelim Industrial Production; Retail Sales

GBP: No data due for release

EUR: GfK German Consumer Climate; French Consumer Spending m/m ; Italian 10-y Bond Auction

USD: Advance GDP q/q; Revised UoM Consumer Sentiment