Australian Dollar:
The Aussie was generally weaker on Monday in part because of its strong rise towards the end of last week and also because of the general market expectations for the release of the RBA minutes later today. After pushing towards 1.0585 on Friday night a generally uneventful day saw investors preferring to remain on the sideline and let the Aussie slide to what appears be the lower levels of a new range around 1.0530. The bigger movements in the AUD were against the JPY which fell as results of the election began to feed through. The AUD/JPY cross reached 19 month highs over 89 before drifting lower towards 88.10, we still find it relatively strong but far off its highs at 88.40 this morning. Overnight the uneventfulness continued through European and US trade although the Aussie did manage to claw its way back up towards 1.0550. This morning we have the release of the RBA minutes from the December meeting at which the interest rate was dropped to 3%, investors will be reading closely for any signs of the RBA’s intentions for next year. This comes after yesterday one of the big four Australian banks released their forecast for local interest rates to drop to 2% by the end of next year. This morning we open relatively unchanged at 1.0545.

We expect a range today of 1.0520 – 1.0585

New Zealand Dollar:
The Kiwi looks to have consolidated itself strongly above 0.84 after a quiet session saw us drift lower for most of the day, eventually finding buyers around the 0.8430 level. The drift lower was in part due to profit taking on the NZD/JPY cross which peaked close to 71.50 as the Japanese election result was confirmed, the market has been following this very closely for the past week and had seen the NZD/JPY rise nearly 4% in a week before pulling back yesterday towards 70.60. On the data front, yesterday we saw local consumer confidence come in at 111.1 which was up from the previous print of 102.5 but this had little real impact on the currency. Overnight the quiet continued although the Kiwi did find some risk support as US equities had a somewhat positive day with the Dow finishing up 100 points. This morning we open at 0.8445 while today looks to be another day of consolidation with the currency likely to remain range traded for most of the day.

We expect a range today of 0.8420 – 0.8485

Great British Pound:
Compared to most of its counterparts the pound has performed relatively well having recaptured the 1.62 level for the first time since October. While most of the major currencies generally drifted lower against the safe haven USD, the GBP bucked the trend and spent most of the European and North American sessions pushing higher. The cause of the rally cannot be put down to any data released locally as the Rightmove House prices disappointed coming in at -3.3 for the month, while data in the US also came in worse than expected. The continued strength looks to be in part due to the continued stalemate in the US with fiscal cliff issues and the strong performance locally last week, we also have some key data out tonight with inflation and producer price data and markets appear to be positioning for some strong readings on both. This morning the pound is also stronger against the AUD (1.5350) and the NZD (1.9185).

We expect a range today of 1.5320 – 1.5400

Majors:
After an active end to last week we found things settle down somewhat on Monday, while the main focus was the long awaited election results from Japan. As it became apparent that the Liberal Democratic Party would claim victory speculators further sold the Yen bringing it close to 84.50 which is a 20 month low against the USD. As is often the case, once the result was confirmed things began to settle down somewhat and we found ourselves trading closer to 84.00, however the weakness in the JPY seems likely to continue as Shinzo Abe’s party has been advocating much more expansionary monetary and fiscal policies and the strong victory now gives them the ability to start pushing these through; there are expectations the BOJ may move this week to increase their asset purchase program. Over in Europe, the ECB President, Mario Draghi made a speech that talked up the new powers of the ECB to oversee the regions banks in a deal struck last week. Draghi believes that this is the first step towards a new phase of integration and should restore confidence in the sector and lead a revival of interbank lending. Investors didn’t share Draghi’s view on the significance of the event and markets traded in a fairly tight range, EUR/USD was held between 1.3145 and 1.3175 for most of the night. Over in the US it was a fairly similar story with NY Fed Empire business sentiment coming in worse than expected at -8.1 but investors still appear unwilling to move on anything unrelated to the fiscal cliff.

Data releases:

AUD:
RBA December minutes, Conference board leading index

NZD:
No data today

JPY:
Department store sales

GBP:
Consumer price index, Producer price index, Retail price index

EUR:
No data today

USD:
Current account balance