Australian Dollar:
Having gained more than one percent last week against its US Counterpart the Australian dollar maintained levels close to 3-week highs yesterday. Trading 20 basis points either side of the 1.0450 mark it was a generally lacklustre session for the Australian unit which appears heavy as it approaches the 1.05 mark. Moving into North American trade the tone didn't change a great deal for the higher yielding asset with tighter than usual ranges emphasising a generally pessimistic market place in which investors appear unwilling to sustain any prolonged rally. Touching lows of 1.0439 against the Greenback the focus this week remains in Europe where finance ministers are likely to announce their next move on Greeces debt. In what can only be described as a directionless 24 hours the Australian dollar opens marginally weaker this morning at a rate of 1.0450 as investors sit tight for signs of life.

We expect a range today of 1.0410 – 1.0490

New Zealand Dollar: The New Zealand dollar has failed to impress over the past 24 hours trading between an increasing tight band of (0.8212 – 0.8245) against its US Counterpart. Whilst 82 US Cents remains a level of consolidation any moves higher have been well capped in the early parts of this week as European leaders remain unable to bridge their differences in an attempt to thrash out an agreement on Greeces next bailout package. With such large levels of uncertainty still hanging over the market the US Fiscal Cliff only adds to the reasons why investors continue to trade with caution as any underlying rally presently lacks conviction. On the outlook today inflationary expectations along with Trade Balance figures remain key risk events with interim support likely to tested firstly at the 0.8200 mark followed by 0.8170. Meanwhile this the morning the New Zealand Dollar opens lower currently buying 0.8210 US Cents.

We expect a range today of 0.8190 – 0.8245

Great British Pound: Like most things the Great British Pound fell against its US Counterpart with the two major themes (US Budgetary talks, Greek debt) stealing the limelight in the early parts of this week. With little progress being made on either front news flows have been minimal as have movements in the Sterling. In such circumstances no news has generally been bad news meaning investors have become increasingly frustrated with the lack of unity being demonstrated across political circles. Falling to an overnight low of 1.5995 against its US Counterpart the Great British Pound opens lower than this time yesterday at 1.6010. On the horizon tonight all eyes will be on the all-important GDP reading which is likely to have a profound impact on the medium-term stance of Monetary Policy keeping in mind the BOE has only recently wrapped up their most recent stimulus effort. Meanwhile on the cross-rates the Sterling opens little-changed against both the Aussie (1.5300) and the Kiwi (1.9475).

We expect a range today of 1.5280 – 1.5345

Majors:
Following the best weekly rally for 2012 global stocks fell yesterday with ongoing political wrangling to blame. Whilst European finance chiefs continued their meeting on Greek aid, at time of writing no fresh news has come to light suggesting the deadlock will be broken. Having approved 130 Billion Euros worth of bailout funding for the highly indebted nation early in the year progress since has been frustratingly slow as Greece still awaits several short-term loan instalments to help meet obligations. Weighed down by the political squabbling the shared unit touched lows of 1.2943 against its US Counterpart as it opens weaker this morning at a rate of 1.2963. Meanwhile in the US and it appears the Republicans and Democrats have learnt little from the mistakes of Europe given fiscal cliff negotiations are once again likely to engulf the entire market place. With the Democrats wish for higher tax rates to upper-income earners being challenged by the Republicans who are in favour of limiting deductions to the wealthy, a fail to meet a compromise threatens to push an already fragile economy even closer to recession. While fiscal cliff negotiations have to some degree created a scenario where investors are simply holding out until they hear something they like Greenback direction is likely to remain choppy towards the end of the week given the expected release of durable goods orders, housing data and GDP.

Data releases:

AUD: No data today
NZD: Trade Balance

JPY: CSPI y/y
GBP: Nationwide HPI m/m. GDP q/q
EUR: No data today
USD: Core Consumer Goods, CB Cy/consumer Confidence, Fed Chairman Bernanke Speaks