Australian Dollar: It was a very quiet Asian session yesterday as investors awaited a beginning of the week catalyst to spur markets in one direction or the other. The local economic docket failed to create any movement as newspaper job advertisements remained at the same volume as a month prior and company operating profits for the previous quarter gained, but by less than the June quarter. Spending the majority of its onshore session gravitating back towards last week’s close near 1.0220, the Aussie bounced early in offshore trade as hopes remain leaders and key players in Europe will work together to save the indebted region. Hitting solid resistance at 1.0300 against the Greenback a report stating major European countries are also at risk of a credit downgrade sent the Australian Dollar an immediate 40 points lower, where it opens this morning at 1.0260. Today holds the last RBA monetary policy meeting for the year of 2011 where many are predicting overseas turmoil will lead to a further 25 basis point cut, potentially taking our central bank interest rate to 4.25%.

We expect a range today of 1.0200 – 1.0310

New Zealand Dollar: The New Zealand Dollar experienced a choppy Monday to start off the week, establishing lows of 0.7765 and highs of 0.7830 during the 24 hour period, yet returning this morning to similar levels as the week’s open. With the next local key risk event on Thursday, that of the monthly interest rate meeting of the Reserve Bank of New Zealand, the Kiwi is likely to remain dominated by global factors until then. Opening this morning against the Greenback at 0.7795, the Kiwi has given up some ground against the Australian Dollar so far this week and its starts the day at 0.7590.

We expect a range today of 0.7740 – 0.7830

Great British Pound: The Great British Pound has snapped a two-day decline against the United States Dollar as investor sentiment improves slightly and local fundamental data surprises to the upside. After spending much of the local session in range-bound trade around the 1.5600 handle it soon rallied, along with other riskier assets, to highs above 1.5700 helped along by a greater than expected expansion of the Services sector for the month of November. A report however stating the S&P intend to put all 17 nations using the Euro on watch for a potential credit rating downgrade has hurt investor appetite late in the day and Cable opens back down at 1.5650 this morning. With risk sentiment remaining in a tug-of-war GBP/AUD opens relatively unchanged from this time yesterday at 1.5230 with GBP/NZD marginally higher at 2.0050.

We expect a range today of 1.5180 – 1.5300

Majors: Investor confidence remained relatively well supported during Asian market hours yesterday as the troubled Euro held its own above 1.3400, refusing to drift back towards Friday’s lows near 1.3365. Markets are still speculating the IMF may soon become involved in helping the Euro-zone recover and Italy’s new technocrat PM announced a 30 billion euro-dollar package of spending cuts and tax increases aimed at ensuring the country can continue to pay off its own debt. Reaching a high of 1.3480 the Greenback soon pared the day’s gains, and then some, as rating’s agency S&P reportedly announced their plans to place all 17 Euro-denominated countries on ‘creditwatch negative’. With nation’s such as France and Germany at risk of a potential downgrade, confidence in the Euro dropped and the pair trade this morning at 1.3380. The greenback also took a minor hit when non-manufacturing PMI registered a disappointing 52.0 down from the previous reading of 52.9, falling against its safe-haven counterpart the Japanese Yen. This pair opens this morning at 77.75.

Data releases:

AUD: Cash Rate; RBA Rate Statement; Current Account

NZD: No data due for release

JPY: No data due for release

GBP: Halifax HPI m/m; BRC Retail Sales Monitor y/y

EUR: German Factory Orders m/m; Revised GDP q/q

USD: No data due for release