Australian Dollar:
The markets main focus yesterday was Chinese GDP, which came in on general expectations at 7.4%, printing the lowest GDP figure since March 2009 but still at a level which suggests the government may delay any further stimulus. But it was the accompanying data (industrial production and retail sales – both better than expected) that pushed the market up initially to a high of 1.0388, however this couldn’t break and we spent the rest of the day capped below 1.0400. A choppy overnight session saw the Aussie eventually push through 1.04 off the back of a successful Spanish bond auction and a better than expected Philly Fed manufacturing gauge. However the level could not be maintained following negativity in the EU summit and poor Google earnings. We open this morning relatively unchanged from yesterday at 1.0370. With minimal local data today we expect the markets to continue to look towards the second day of the European meeting tonight for direction.

We expect a range today of 1.0330 – 1.0410

New Zealand Dollar:
With the lack of any significant local NZ data releases yesterday the Kiwi took most of its direction from offshore events with a large focus on the Chinese GDP, this came in at 7.4% as expected which helped in consolidating the 0.82 level picked up the previous night on the back the Spain’s credit rating. Overnight further gains were found in Europe and the US thanks to Spanish bond auctions and a stronger Philly Fed however the 0.82 level was given up after a drop in US equities following much lower than expected earnings from Google. All in the all though, the NZD is looking quite healthy at the moment and the sharp drop it experienced on Tuesday with the poor CPI figure seems like a lifetime ago. On the crosses we have seen some key levels taken out with NZD/JPY pushing past 64.55 and breaking above 65 yesterday, while the Kiwi has continued its slide against the AUD with the 1.2650 level broken. We open this morning at 0.8190 with today is shaping up for another day of consolidation leading into the long weekend.

We expect a range today of 0.8160 – 0.8230

Great British Pound:
A fairly active overnight session for the GBP with UK retail sales and focus on the European ministers meeting along with a Spanish bond auction. The retail sales figure was better than expecting coming in at 2.9% compared to 2.4% expected and as a result GBP/USD immediately jumped above 1.6150 eventually hitting a high of 1.6170. This comes on the back of strong employment figures and flat CPI earlier the week which are starting to show positives for the UK economy. These gains were given up a short time later however, as the market began processing the rather negative comments flowing through from the EU summit. The drop in US equities towards the end of the North American session saw a key level of 1.6125 broken which led to a 70 point drop down to 1.6050 which is where we find ourselves at the open this morning. On the cross rates the GBP is lower against both the AUD (1.5480) and the NZD (1.9610).

We expect a range today of 1.5455 – 1.5560

Majors:
A lot of activity overnight in Europe with the first day or the finance ministers meeting keeping the markets fixated. Also in Europe was a better than expected Spanish bond auction which saw 4.61 billion Euros (4.5 bill target) at an average yield of 5.458% (5.666% prev.) this saw EUR/USD recapture the 1.31 level previously lost after some earlier stern comments from Merkel in regards to Spain and Greece. During the US session we had the release of the Philly Fed business outlook survey which printed above expectations at 5.7 to provide the first positive number in 5 months. This saw a dip in the USD with riskier currencies gaining the most, the dip was short-lived however as quarterly earnings from Google were released 4 hours early and provided profit figures much lower than analysts’ estimates causing a drop in US equities and flight from risk. EUR/USD gave up the 1.31 level and is currently trading at 1.3064 while USD/JPY is stronger at 79.25 with speculation of further easing by the Bank of Japan on the way.

Data releases

AUD:
No Data Today

NZD: Net migration, Credit Card spending

JPY:
All Industry Activity Index, Leading Index

GBP: Public Finances, Public Sector Net Borrowing

EUR:
German Producer Prices

USD:
Existing Home Sales