Australian Dollar:

In what was a momentum session of movements, the Australian Dollar opens a staggering two and a half cents higher against its US Counterpart this morning at a rate of 1.0256. After rallying consistently throughout the domestic session, the initial buying frenzy was kicked off following on announcement out of China that the Central Bank had cut the amount of cash that Banks must set aside as reserves, the first time the ratio has been decreased since 2008.

As the Australian Dollar entered the offshore session further news from six developed Nations Central-Banks that they would collectively cut the overnight Index Swap effectively making borrowing cheaper for banks saw the Aussie Dollar surge to reach an eventual high of 1.0330 against the Greenback. Looking ahead today after such a pro-longed rally this week, questions remain as to whether support can again be sustained above the 1.0150 level.

We expect a range today of 1.0180 – 1.0320

New Zealand Dollar:

The New Zealand Dollar enjoyed a sustained rally of more than 2 percent yesterday as a handful of Central Banks including the ECB and the US Federal Reserve agreed to jointly cut the rates on overnight dollar swaps, helping improve liquidity and cut the cost of borrowing for European Lenders.

As has been the case in previous months the Kiwi’s direction was again dictated by European News Flows, with the latest effort to contain the regions debt crisis seeing the Nations Currency rally to an overnight high of 0.7821 against its US Counterpart, a staggering 220 Basis points higher than its earlier low of 0.7576. Looking ahead this morning the Kiwi opens significantly stronger currently buying 77.98 US Cents.

We expect a range today of 0.7700 – 0.7840

Great British Pound

The Great British Pound followed Global Stocks and Commodities higher yesterday after an announcement by the Federal Reserve and five other Central Banks to lower interest rates on Dollar Swaps, hence improving liquidity and making cheaper the borrowing costs of European Lenders. In what was a busy session of Central Bank Announcements the Bank of China also adopted a more expansionary approach reducing its cash reserve ratio.

The FTSE 100 Index Jumped 2.3 percent following the announcement as the Sterling advanced from an earlier low of 1.3258 to reach an eventual high of 1.5779 against its US Counterpart. Meanwhile this morning the Sterling opens noticeably stronger against the Greenback at a rate of 1.5705 whilst it struggled to keep pace with the Australian Dollar which appreciated more than 2 percent, opening lower at a rate of 1.5284

We expect a range today of 1.5200 -1.5420

Majors:

Global Stocks rose, Commodities rallied and the EURO Surged overnight as Benchmark indices edged towards their largest three-day rally since August. In an attempt to dampen the impact of an already worrying European Debt-Crisis the Federal Reserve, The ECB along with four other Central Banks acted overnight to make additional funds available to lenders. With a change in the overnight Index swap essentially making borrowing less-expensive the move signals a collective agreement that additional firepower is required for what has now become a global issue.

Following the announcement the EURO rallied from an earlier low of 1.3258 against its US Counterpart to reach an eventual high of 1.3532. In the US Overnight the Federal Reserve through the release of its monthly Beige Book Survey stated that the economy expanded at a moderate pace in 11 of 12 districts with the report also stating that the US economy remains strong enough to avoid a further recession however not strong enough to reduce the level unemployment below 9 percent.

With the economic back drop in the US slowly improving and a more globalised approach to ensuring liquidity in Europe overnight, the late rally has managed to trim Monthly losses in the S&P 500 to a mere 1.5%. Meanwhile this morning the Greenback was sold overnight as investors jumped back into riskier assets opening weaker against the Japanese Yen at a rate of 77.514

Data releases

AUD: Building Approvals m/m, Retail Sales m/m, AIG Manufacturing Index, Commodity Prices m/m.

NZD: ANZ Commodity Prices m/m.

JPY: No Data Today

GBP: BOE Financial Stability Report, Halifax HPI m/m, Manufacturing PMI,

EUR: ECB President Draghi Speaks, Final Manufacturing PMI

USD: Unemployment Claims, ISM Manufacturing PMI, Construction Spending m/m, Total Vehicle Sales