:: Australian Dollar: The local market was caught by surprise yesterday following the release of the minutes to this month's Australian Reserve Bank meeting. Following the gathering itself where the central bank kept rates on hols at 3% the market began to speculate that we may have seen the end of the easing cycle and long term interest rates began to rise on bond markets. Yesterday's statement poured some cold water over the theory as the RBA left the door open for more reductions in rates at a later date. The minutes concluded that they viewed “the inflation outlook as affording scope for some further easing of monetary policy” triggering a sharp drop in the Aussie dollar from 0.7950 to an intraday low around 0.7860. La te Asia and early Europe reversed the trend taking the AUD/USD back up on the back of a rally in the EUR/USD peaking back near 0.8050. A negative finish on Wall Street saw profit takers emerge sending the local unit back to this mornings open at 0.7935.

- We expect a range today in the AUD/USD rate of 0.7870 to 0.7970

:: Great Britain Pound: The Pound Sterling bounced back in a big way during late Asia and early Europe rallying from 1.6250 to post a brief high around 1.6500. U.K economic data in the form of the Retail Price index and the Consumer Price Index both surprised to the upside during the month of May triggering the increase in demand. The GBP opens in Asia today exchanging at 1.6400 and 2.0665 against the U.S and Australian dollars with U.K employment data and the release of the BoE minutes due this evening the volatility is sure to continue.

- We expect a range today in the GBP/AUD rate of 2.0560 to 2.0720

:: New Zealand Dollar: After surviving an early onslaught the Kiwi dollar bounced back from its intraday lows below 0.6250 to enter offshore trade at 63 cents. Better than expected economic sentiment for the Euro region saw a rejuvenation of risk appetite and a move away from the Greenback which in turn benefited the NZD/USD. The Kiwi hit an eventual high near 64 cents peaking at 0.6390 before some jitters re-emerged near the U.S close as equity markets in the region finished in negative territory. This morning sees the NZD open back at 0.6305 in exchange with the Greenback while the AUD/NZD cross remains relatively unchanged at 1.2600.

- We expect a range today in the NZD/USD rate of 0.6230 to 0.6330

:: Majors: The Euro received a boost overnight from a much higher than expected increase in sentiment throughout the region in June as measured by the ZEW institutes Economic Sentiment Survey of financial experts. EUR/USD rallied from late Asian levels around 1.3800 to post an eventual offshore high of 1.3931 following the data with an increase in confidence that the worst of the economic slowdown in Europe has passed. In U.S economic data released continued easing in supply side inflation as measured by the PPI combined with stronger than forecast housing data sent mixed signals to the market. The reaction on equity markets saw the Dow Jones finish the session 1.2% in the red sending EUR/JPY down from its high of 135.30 to finish at 133.35. Adding to the relatively negative finish to the session was a much larger than expected 1.1% drop in U.S Industrial Production during the month of May a clear sign of continued deterioration in the manufacturing, mining and utility sector s. In other news yesterday the BoJ released an upward revision to growth forecasts for the second consecutive month following the conclusion of their meeting yesterday creating an increase in demand for the Japanese yen in Asia with USD/JPY dropping from 98 to 96. The big dollar opens trading this morning at 1.3835 and 96.40 against the Euro and Yen with Consumer Price Inflation data scheduled for release this evening out of the U.S likely to play havoc with Treasury yields and the currencies.

:: Data Releases:

  • AUD: Westpac Leading Index (APR); Dwelling Starts (Q1)
  • CAD: Leading Indicators (MAR); Wholesale Sales (MAR)
  • EUR: Euro-Zone Trade Balance (APR)
  • GBP: Bank of England minutes; Claimant Count Rate and Jobless Claims Change (APR)
  • JPY: Machine Tool Orders (MAY)
  • NZD: No Data due today
  • USD: Consumer Price Index (MAY); Current Account Balance (Q1)