:: Australian Dollar: After attempting to retest the 83 cent handle in early Asian trade yesterday the Aussie dollar ran into some resistance, peeling back to settle around 0.8250 during the afternoon. Early European investors however sold the high yielder after concerns about the Japanese economy following the country's poor Retail Trade data, a much lower than expected German CPI reading and sharp declines in commodity prices. With Euro retreating and risk aversion intensifying in U.S trade the AUD hit an overnight low around 0.8125 before bouncing slightly to open this morning back at 0.8165. Today's volatile readings on Building Approvals and New Home Sales for the month of June will give economists some insight into the state of the housing market with some upside expected to eventuate following the announcements. It does appear however that for the very near term at least the AUD will struggle to regain a strong footing above 0.8220 with 81 cents a likely target from here.

  - We expect a range today in the AUD/USD rate of 0.8100 to 0.8200

  :: Great Britain Pound: Despite lower than expected Mortgage Approvals and Consumer Credit readings for the month of June the Pound Sterling managed to hold on to its early London lows of 1.6345 against the Greenback. Of particular concern to economists was the lowest increase in consumer lending since records began on this indicator 16 years ago. The GBP did however manage to briefly spike back above 1.6400 only to open this morning back at 1.6360. The GBP/AUD cross rate found some relief following a large fall in the Aussie dollar, bouncing back from recent lows at 1.9825 to trade above the magical 2 mark and opens this morning at 2.0045.

  - We expect a range today in the GBP/AUD rate of 1.9950 to 2.0100

  :: New Zealand Dollar: The Kiwi dollar traded sideways over the last 24 hours seemingly in a holding pattern between 0.6530 and 0.6590 ahead of this morning's RBNZ meeting. At the time of writing the Reserve Bank had announced no change to the Official Cash Rate or OCR as its referred to. However the markets reacted savagely to the accompanying statement punishing the Kiwi lower from 0.6565 to 0.6500 immediately after the release. In what was an extremely dovish assessment of the local economy and the banks stance on Monetary Policy Governor Bollard said “We consider it appropriate to continue to provide substantial monetary policy stimulus to the economy. The OCR could still move modestly lower over the coming quarters. We continue to expect to keep the OCR at or below the current level through until the latter part of 2010” and that “New Zealand has not benefited to any significant extent from the rebound that has occurred recently in global hard co mmodity prices.” He went on to add that “...the level of the New Zealand dollar and wholesale interest rates are higher than assumed in our forecasts. The level of the dollar in particular, is not helping the sustainability of future growth, and brings with it additional economic risks.” Given the statement we expect the Kiwi to continue lower today.

  - We expect a range today in the NZD/USD rate of 0.6420 to 0.6520

  :: Majors: The Euro continued to decline in overnight trade dropping after lower than expected German inflation data. Economists had forecast a decline in the CPI figure in July however preliminary readings suggest a larger than expected 0.6% decline on an annualised basis, the largest yearly decline in over 22 years. The news started the selloff in EUR/USD to test the 1.4 handle for the first time in over two weeks with added selling pressure coming after the release of U.S Durable Goods data. Demand for big ticket items such as cars and planes declined 2.5% in June, a much larger than predicted fall sending investors back into safer assets. The Greenback also surged against the Yen, jumping from 94.00 to an overnight high of 95.35 with yesterday's poor Japanese Retail Trade data adding to the weakness in the JPY. In what was a beacon of hope for the U.S economy the Federal Reserve Banks Beige Book revealed that there had been some moderation in the pace of the econom ic decline, with Friday's U.S GDP data to determine how severe the real situation was in Q2 this year.

  :: Data Releases:

  • AUD: Jun HIA New Home Sales & Jun Building Approvals
  • NZD: RBNZ Decision - Rates On Hold
  • USD: Initial Jobless Claims (Jul 25)
  • GBP: Jul GfK Consumer Confidence
  • EUR: Jul Confidence & German Jul Unemployment
  • JPY: Jun Industrial Production
  • CAD: No Data Expected today