Australian Dollar
Nervousness around Europe and speculation of soft CPI data ahead has sent the Australian dollar lower into the close of last week, falling from earlier levels above $1.0400. Gapping lower again this morning the local unit is currently banking just above 1.0350 against the Greenback with today’s PPI data set to be the prelude to Wednesday’s CPI release. Following weak unemployment data earlier this month, if price data lags expectations this is likely to move focus onto the RBA’s next monetary policy meeting and increase speculation of a rate cut in the months ahead. Support currently lies around 1.0290/300 for the Aussie, with resistance in the 1.0400/40 channel.

We expect a range today of 1.0300 – 1.0400

New Zealand Dollar
Risk aversion intervened in the currency market’s on Friday and a week that had seen strengthening commodity prices supporting the Kiwi ended with a negative tone. After earlier trading in a tight pattern between 0.8020 and 0.8030, ongoing nerves surrounding the banking sector in Spain took over during European hours and a fall back towards 0.7980 was witnessed before the final bid for the week was sealed at 0.7990. Gapping 20 points lower on open this morning, an empty economic docket locally leaves focus on producer price data across the Tasman as well as global investor sentiment. The cross rates see the NZD still near all time highs against the euro and choppy trade against the Aussie bringing the NZD slightly lower to 0.7700.

We expect a range today of 0.7930 – 0.8020

Great British Pound
Public sector borrowing figures failed to create a ripple in the markets on Friday although according to the report by the Office for National Statistics borrowing levels were elevated from this time last year. Focus instead was on concern for Spain’s financial system, leaving the Pound to fall against the Greenback as a result of risk aversion but allowing gains against the Euro to reach fresh 45-month highs of 1.2900 as of this morning. The antipodean cross rates open this morning in familiar ranges, GBP/AUD at 1.5070 and GBP/NZD at 1.9560, with the next key focus for Sterling being Wednesday’s GDP figures.

We expect a range today of 1.5000 – 1.5140

Majors
Markets open under pressure this morning as Friday’s events brought little optimism to the table. Despite eurozone finance ministers approving a bailout of Spanish banks totalling up to 100bn euros, the reality is that funds will not be available until at least September and this caused a run on equity and bond markets. Spanish 10-year yields jumped to 7.28%, above the 7% level that is the benchmark of unsustainability, and the region’s stock index suffered its worst fall in almost 2 years. The euro fell to close the week at 1.2150 and this morning has touched fresh two-year lows of 1.2112. The Greenback is also feeling the pressure as speculation continues the Fed will roll out a third round of quantitative easing, keen eyes will be focused on US GDP data out later this week. USD/JPY has fallen below 78.50 to open this morning around 78.40.

Data releases:

AUD: PPI q/q

NZD: No data due for release

JPY: No data due for release

GBP: No data due for release

EUR: Consumer Confidence

USD: USD Chicago Fed Nat Activity Index (JUN)