Australian Dollar: The Australian Dollar opened under pressure yesterday as risk aversion continued to shroud the markets. Combined with a greater than expected fall in building permits for the month of September the Australian Dollar touched session lows of 1.0280 as this theme continued through the morning. As market sentiment began to improve the Aussie set about paring some of its recent losses, moving back through 1.03 to touch highs of 1.0420 however these levels could not be maintained. A greenback rally that ensued after rumours of further quantitative easing in the US were temporarily put to rest sent the Aussie lower to test support at 1.0300. With support holding thus far we open this morning at 1.0340 ahead of Retail Sales data due out later this morning.

We expect a range today of 1.0270 – 1.0380

New Zealand Dollar: The risk-sensitive New Zealand Dollar has lost 0.7% against the Greenback over the past 24 hours falling from opening levels of 0.7940 yesterday morning to an intraday low of 0.7880 during North American hours. Penalised by increasing worries for the Euro-zone’s new plan or action as well as Greenback strength following their central bank meeting overnight meant the Kiwi finished the day as one of the worst performers. Looking ahead, today’s employment data is key as economists predict a 0.1% drop in the overall unemployment rate. Although overseas events and general sentiment threaten to overshadow direction for the NZD/USD; direction of the Australian Dollar cross-rate is more likely to be driven by this domestic event. The AUD/NZD opens this morning at 1.3090 (0.7640).

We expect a range today of 0.7860 – 0.7950

Great British Pound: An unexpected rise in output from the UK’s construction sector helped the Great British Pound minimise falls against the Greenback overnight as the dollar pared losses across the board. Falling from highs around 1.6030 Cable found initial support at 1.5980 before moving lower to 1.5940. Opening just above these levels at 1.5945 the economic docket holds the release of Services PMI; however focus is likely to be directed more towards the Euro-zone where the G20 summit begins as well as the scheduled ECB rate decision. Sterling opens this morning relatively unchanged against the Aussie Dollar at 1.5410, yet slightly higher against the Kiwi at 2.0150.

We expect a range today of 1.5340 – 1.5490

Majors: The Greenback has pared recent losses against the Euro, along with several other of its major trading counterparts, as the monthly meeting of the Federal Open Market Committee revealed no changes in its current policy. The FOMC revealed ‘Operation Twist’- the exchange of shorter dated bonds for longer dated bonds- would remain in place although no further quantitative easing measures would be put into place. After dropping to 1.3820 earlier in the session on improved risk appetite, the Greenback rallied to 1.3720 after the central bank’s statement was released, helped along also by a larger than expected increase in non-farm employment as surveyed by ADP. At open this morning the pair trade at 1.3730/40 and the USD/JPY remain in tight range-bound trade around 78.00. Market participants are expecting to focus their attention on the beginnings of this month’s G20 meeting kicking off in Cannes this evening as well as the monthly meeting of the European Central Bank, where speculation remains as to a potential cut in interest rates to help the indebted euro-zone.

Data releases

AUD: Retail Sales m/m; AIG Services Index

NZD: Employment Change q/q; Unemployment Rate

JPY: Bank Holiday- No data due for release

GBP: Services PMI

EUR: Minimum Bid Rate; ECB Press Conference

USD: ISM Non-Manufacturing PMI; Factory Orders m/m; Prelim Nonfarm Productivity q/q