:: Australian Dollar: The Australian Dollar opens near a three-and-a-half week low today at 0.8925. The Aussie was modestly supported during local trade on Wednesday reaching a high of 0.9042 after data showed that inflation picked up in the December quarter adding to the likelihood of another hike in interest rates next week from the present level of 3.75 per cent. The consumer price index rose 0.5 per cent in the three months to December for an annualised figure of 2.9 per cent. During offshore trade however, the unit succumbed to growing investor concerns about the outlook for growth in China and uncertainty over U.S. banking regulations. The unit moved down from 0.8975 to 0.8909 late in the New York session.

- We expect a range today in the AUD/USD rate of 0.8890 to 0.8990 

:: Great Britain Pound: This morning the Cable opens just over 1.6175 against the greenback. Economic data from the UK last night revealed that retail sales for January performed worse than expected and the country's unemployment rate had decreased. The Pound advanced 0.3% versus the Greenback to a session-high 1.6245 after comments from Bank of England policy-maker Andrew Sentance hinting at the prospect of higher UK interest rates as the recent pound weakness may stoke inflationary pressures. Meanwhile, the pound opens higher against both the Australian Dollar (1.8050) and the New Zealand Dollar (2.2860).

- We expect a range today in the GBP/AUD rate of 1.7980 to 1.8100 

:: New Zealand Dollar: The New Zealand Dollar opens lower today at 0.7030 as high-yielding currencies feel the pressure amid concerns over the growth outlook for China. It was a lacklustre local session on Wednesday in the absence of any domestic economic data and the kiwi moved between 0.7070 and an intraday high of 0.7090. The Reserve Bank of New Zealand has left the Official Cash Rate (OCR) on hold today at 2.5 per cent, however, the currency dipped 20 points on the announcement despite Governor Bollard reiterating his comments from December that we would expect to begin removing economic stimulus around the middle of 2010.

- We expect a range today in the NZD/USD rate of 0.7010 to 0.7075 

:: Majors: The big dollar and the Japanese Yen both extended their recent gains overnight as investors continue to eschew risk amid concerns about the outlook for growth in China and uncertainty over U.S. banking regulations. The Japanese Yen hit a one-month high overnight of 89.12 against the greenback after sales of new homes in the U.S. unexpectedly dropped in December (-7.6 per cent) to an annual pace of 342,000. Meanwhile, the U.S. Federal Reserve, as expected, kept interest rates on hold at zero to 0.25 per cent and restated its recent pledge to keep rates low for an extended period. The Euro hit a 5-month low overnight of 1.4002 as fiscal concerns in Greece and Spain continue to weigh heavily on the 16-nation currency.

:: Data Releases:

  • AUD: No data today
  • CAD: No data today
  • EUR: EZ consumer confidence, Jan; German unemployment change, Jan
  • GBP: No data today
  • JPY: Retail Sales, Dec
  • NZD: RBNZ Official cash rate announcement
  • USD: Durable goods, Dec; Initial jobless claims, w/e 23 Jan