Australian Dollar
ANZAC Day kept local markets quiet yesterday with the Australian dollar trading in a 10-15 point range around 1.0310 for most of the session. Moving offshore positive earnings from Apple in the United States spurred along equity markets, an increase was announced in forecasted US economic growth and a slight crack was left in the door for further quantitative easing should the world’s largest economy require assistance. All of these were conducive to risk sentiment and a weakening Greenback, and markets rallied accordingly. Breaking through resistance at 1.0350, the Aussie trades this morning at 1.0360 with the next key release coming from US unemployment and housing data this evening.

We expect a range today of 1.0280 – 1.0380

New Zealand Dollar
The RBNZ has left interest rates on hold just this morning, not willing to counteract the cut imposed after the Christchurch earthquakes to aid the recovery. Citing stagnant inflation and a rising local currency despite a cooling in commodity prices, they believe monetary policy is currently at appropriate levels. Bets are now on that the central bank will not act until later 2012 or even 2013 although the New Zealand Dollar still rallied of the back of the overall neutral statement. Short-covering of positions from those expecting a more dovish release pushed the NZD/USD towards 0.8165 and the NZD/AUD towards 0.7885. What seems to be only an initial reaction, both currency pairs are moving back closer to pre-release levels and trade currently at 0.8150 and 0.7874.

We expect a range today of 0.8100 – 0.8180

Great British Pound
Gross Domestic Product in the UK surprised to the downside yesterday, posting a 0.2% contraction in contrast to the expected 0.1% increase. Following on from the previous quarter’s 0.3% contraction, the United Kingdom’s economy is now technically in recession, a definition based on two consecutive quarters of negative growth. Halting what has been a solid rally in Sterling, Cable dropped around 60 points immediately and found support at 1.6080. Shrugging off the disappointment, a weakening greenback and rallying equity markets pulled Cable higher again and against what many would have predicted after the GDP figures, GBP/USD trades higher this morning at 1.6160 after touching highs near 1.6180. Feeling the pain through the risk-sensitive cross rates the Pound has fallen against the Aussie and Kiwi, trading lower at 1.5600 and 1.9820 respectively. Today holds nationwide consumer confidence figures, as well as mortgage approval data and CBI realised sales, although markets are likely to focus on US data ahead tonight.

We expect a range today of 1.5530 – 1.5680

Majors
The Greenback has faltered overnight, despite US Federal Reserve chairman Ben Bernanke initially commenting the central bank predicted a gradual improvement for the economy moving forward. Such a view itself would lend support to the dollar, however he also commented the Fed were willing to ‘do more’ to boost the economic recovery should circumstances indicate this necessary; effectively leaving the door open for further quantitative easing. An option that potentially serves to debase the underlying currency, the acknowledgment of even its slight its possibility dampened the US Dollar and it fell against the Euro towards 1.3230. With orders for core durable goods also losing ground and little change in the euro-zone debt situation, EUR/USD holds trade this morning at 1.3120, its highest level since early April 4. USD/JPY trades unchanged from this time yesterday at 81.30, as both central banks position themselves for potential monetary easing. Further direction for the Greenback will be taken from this evening’s unemployment claims and pending home sales.

Data releases:
AUD: CB Leading Index m/m

NZD: Official Cash Rate; RBNZ Rate Statement

JPY: All Industries Activity m/m

GBP: Nationwide Consumer Confidence; BBA Mortgage Approvals; CBI Realized Sales

EUR: German Prelim CPI m/m;

USD: Unemployment Claims; Pending Home Sales m/m