Australian Dollar: Despite a relatively upbeat NAB survey on business conditions the Aussie dollar retreated from its intraday highs at 0.8380 in Asia yesterday dropping to a low of 0.8320 with the market questioning the sustainability of the recent rally in equities. Early European investors took the AUD higher again retesting the Asian highs following a slightly better than expected revision in German inflation data. Once again however resistance around 0.8380 capped any further advances and the Aussie dollar retreated to an overnight low near 0.8280 before bouncing slightly to open this morning at 0.8295. The move lower in U.S trade came as investors remained nervous heading into the U.S Federal Reserve Bank meeting on interest rates this e vening and with wholesale inventory data out of America disappointing equities and the AUD both moved lower in tandem. In Asia today the market will take some short term direction from the Westpac Consumer Confidence survey for August and second quarter release for the Wage Cost Index.

- We expect a range today in the AUD/USD rate of 0.8250 to 0.8320

 Great Britain Pound: With June UK imports increasing at their fastest pace in almost a year the trade deficit unexpectedly narrowed more than the 2.3 billion GBP forecast to 2.2 billion. The data is a ray of hope for the UK economy with exports also increasing, albeit not as much as imports. Currency markets however appear to be occupied with developments in the U.S and with equity markets falling around 1% any upside benefit from the UK news appeared to be negated. The Pound Sterling opens relatively unchanged against the Greenback at 1.6480 but higher against the Aussie on the cross. After falling to 1.9630, its lowest level since 1996, the GBP/AUD rallied to open this morning back at 1.9850 after a big drop in the AUD/USD.

- We expect a range today in the GBP/AUD rate of 1.9735 to 1.9935

New Zealand Dollar: The New Zealand dollar received a small boost from stronger than expected card spending data during yesterdays early morning session edging higher to test 0.6770 against the U.S dollar. In offshore exchanges however the NZD fell swiftly to a low of 0.6660 taking its lead from lower equity prices and risk aversion following worse than forecast U.S economic data. The Kiwi opens local trade at 0.6675 against the Greenback as markets keenly anticipating tonight's FOMC interest rate decision with rates widely expected to remain on hold. The accompanying rhetoric following the announcement however is likely to move the market as analysts look for any clues as to the possible winding back of the controversial program of printing money.

- We expect a range today in the NZD/USD rate of 0.6650 to 0.6700

Majors: The Bank of Japan kept rates on hold yesterday as expected and as a result the Yen experienced little movement in Asia trading between 96.60 and 96.90 against the Greenback. The BoJ governor did however address the markets concern about possible deflation in the region stating that even though it may take time for falls in prices to end the central bank has been working to improve such conditions by keeping policy target rates at low levels and stimulating corporate activities . The Euro received a boost in early offshore trade with preliminary inflation figures, as measured by the Consumer Price Index, for Germany unexpectedly revised from -0.6% to -0.5% for the year to July. EUR/USD jumped from 1.4135 to 1.4185 in European exchange with further upside limited due to a large drop in German Wholesale Price Index for the same period. In a stark reminder of the challenges ahead for the U.S economy wholesale inventories in the region declin ed for the tenth consecutive month. Analysts had been expecting falls of around 0.9% however the 1.7% drop triggered a fall in equities and increased risk aversion sending EUR/JPY lower from 136.85 to 135.25, taking both EUR/USD and USD/JPY down with it. This morning sees the big dollar open in Asia at 1.4145 and 95.95 against the Euro and Yen respectively with all eyes on this evenings FOMC meeting and trade balance data.

Data Releases:
• AUD: Aug WBC Consumer Confidence & Q2 Wage Cost Index
• NZD: No Data Expected today
• USD: FOMC Rate Decision & Jun Trade Balance
• GBP: Jul Jobless Claims & Jun 3mth ILO Unelpoyment Rate
• EUR: Jun Industrial Production
• JPY: Jul Industrial Production Forecast, Jun Capacity Utilisation Forecast & Jul Domestic Corporate Goods Price Index
• CAD: Jun New Housing Price Index & Jun International Merchandise Trade
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