Australian Dollar:
The Australian dollar found some support in early morning trade yesterday after consumer confidence surprisingly jumped in October by 5.2 percent. Given both local equity and housing markets have performed consistently well when compared to our overseas counterparts there is also evidence that the active cuts in the benchmark interest rate taken by the RBA are now starting flow through to the broader economy. Despite intraday highs of 1.0455 being witnessed early in the session, levels in excess of 1.04 have once again proved too much for the higher yielding asset. Weighed down heavily as the Australian dollar entered north American trade, disappointing economic releases from Europe as well ongoing fears surrounding the fast approaching Fiscal Cliff in the US triggered a noted move down in the Aussie which bottomed out at a rate of 1.0375. In what’s shaping up as choppy end to the week interim support should kick in around 1.0350 as the Australian dollar opens lower this morning at 1.0375

We expect a range today of 1.0350 - 1.0410

New Zealand Dollar:
All signs have pointed towards a lower New Zealand dollar over the past 24 hours with poor releases both internationally and locally having a negative impact on the currency whose value is so highly dependent on global risk flows remaining positive. Taking off on the wrong foot Retail Sales contracted by a staggering 0.3 percent in September missing forecasts by all most a full one percentage. Adding to the pile of disappointing reads which have come to light over the past week the New Zealand dollar managed to sink to overnight lows of 0.8085, having started the day close to the 82 US Cents handle. Whilst concerns over sovereign debt levels in Greece and Spain are likely to garnish further attention the great unknown in the short-term still surrounds the ever ballooning US Fiscal deficit which blew out by a further 20 percent for the month of October. Opening this morning noticeably lower the New Zealand dollar currently buys 81.10 US Cents

We expect a range today of 0.8080 - 0.8140

Great British Pound:

Like most things overnight the Great British Pound fell against its US Counterpart. Following comments made by BOE Governor Mervyn King that the UK economy is likely to shrink this quarter, Policy Makers have once again left the door open for further asset purchases down the track should the economy require an additional boost. In the face of a subdued recovery the Sterling has failed to re-establish itself up above the critical 1.60 level tumbling further overnight to lows of 1.5840. Providing a glimmer of hope for the Sterling a better than expected unemployment reading yesterday of 7.8% has helped the cable open stronger against both the Aussie (1.5270) and the Kiwi (1.9525).

We expect a range today of 1.5240 – 1.5300

Majors:

In minutes released from the US Federal Reserve’s most recent meeting last month a number of officials have said the Central Bank may need to further extend bond purchases when the most recent stimulus measure, Operation Twist, ends next year. In a clear sign that Policy Makers still remain unhappy with the sluggish progress of the world’s largest economy the implications of further liquidity are likely to weigh heavily on the Greenback over the medium term. In a very busy session overnight disappointing retail sale figures combined with ongoing Fiscal Debt talks scared investors as witnessed by the fall in global equities. With the Greenback receiving mixed signals from pretty much everywhere overnight the trump card in favour the worlds reserve currency came after Japanese Prime Minister Noda that parliament will be dissolved on the 16th of November with elections to commence a month later in December. Triggering a large depreciation the Japanese Yen the Greenback looks healthy in comparison it opens stronger at a rate of 80.17. Meanwhile in Europe after trading between a 24 hour range of (1.2698 - 1.2780) against its US Counterpart the Euro has remained surprisingly well supported despite the release of Industrial Production figures which showed a contraction of 2.5 percentage in October. On the outlook this evening volatilities are set to remain heightened given the expected release of GDP figures across Europe as well ongoing Fiscal Deficit talks in the US.

Data releases

AUD: MI Inflation Expectation
NZD: Business NZ Manufacturing Index
JPY: No data today
GBP: Retail Sales m/m
EUR: French Prelim GDP q/q, German Prelim GDP q/q, Italian Prelim GDP q/q, ECB Monthly Bulletin, CPI y/y, Flash GDP y/y
USD: Core CPI m/m, Unemployment Claims