Australian Dollar
It was a similiar story for the Australian dollar yesterday as investors appeared reluctant to hold long positions in the currency deemed to be riskier in nature. With local stocks also losing ground speculation has already began that the European Summit set to kick off later in the week is unlikely to bring any new direction for the highly indebted 17 Nation Euro-Zone. Trading to an overnight low of 0.9968 against its US Counterpart the Australian dollar is likely again to test the critical parity level given both Spain and Italy are also set to sell off further debt bundles later in the week, albeit at a higher cost. Opening this morning around 30 basis points weaker at 1.0007 against the Greenback in the absence of any local data today its expected range bound trading should again establish itself half a cent either side of parity with the downward bais still in tact for the higher yielding unit.

We expect a range today of 0.9960 – 1.0060

New Zealand Dollar
Risk positions have continued to be shed in overnight trade as witnessed by the strenthening of the US Currency against 14 of its 16 major counterparties. Struggling to maintain levels close to a seven-week high against the Greenback the New Zealand dollar fell to an overnight low of 0.7843 as pressures continue to mount on German Chancellor Angela Merkel who has maintained her hardline stance against shared liability for European Debt. Given the ongoing fears of contagion mixed with signs of dwindling global growth the Kiwi has done well to keep its head above water as it opens this morning at a very similiar level to where we left it yesterday, currently buying 78.70 US Cents

We expect a range today of 0.7830 – 0.7920

Great British Pound:
UK Stocks slid for a third straight day yesterday along with the Great British Pound as investors await the commencement of the European Summit which is due to start in Brussels later this week. Along with the summit, Italy and Spain are also set to hold a string of bond auctions which should further intensify the focus on European contagion fears. Despite the less than optimistic slant towards weeks end, ranges have remained relatively tight over the past 24 hours which saw the Sterling claw back earlier losses opening virtually unchanged at 1.5572 against is US Counterpart. Meanwhile this morning a quick look at this cross rates reveals a stronger Sterling against both the Australian dollar (1.5560) and the New Zealand dollar (1.9768) which have both fallen victim to broader risk sentiment

We expect a range today of 1.5510 – 1.5620

Majors:
Stocks slid, treasuries rose and the Greenback strengthened in what proved to be an overall bearish session across global markets. With optimism waning ahead of yet another European Summit which is set to take place later this week, German Chancellor Angela Merkel has again rejected joint euro-area bonds in a speech made overnight. Given expectations remain low it came as little surprise to see the shared currency take a fall overnight comfortably breaching the 1.25 mark against its US Counterpart. Trading to an overnight low of 1.2470 we open this morning reeling from a half a cent drop as the Euro swaps hands at a rate of 1.2502. Whilst European happenings did once again steal the limelight overnight there was some good news across US markets with demand for New US Homes rising more than forecast in the month of May. The rise in purchases up to 369 000 (annual rate) marked the strongest gain in more than 2 years with a fall in borrowing costs starting to lure buyers into the relatively sedate housing market. Looking ahead this week, US GDP figures due for release Wednesday as well as the European Summit due to commence later in the week remain the highlights of an otherwise quiet economic docket.

Data releases

AUD:
No data today

NZD: Trade Balance

JPY:
No data today

GBP: CBI Realized Sales, BBA Mortgage Approvals

EUR:
German Prelim CPI m.m

USD:
Core Durable Goods Orders m/m, Pending Home Sales