:: Australian Dollar: Persistent concerns surrounding Chinese lending and tightening credit controls dampened expectations for growth in the Asian region in 2010 yesterday following the news that some lenders were asked to rein in credit as they failed to meet regulatory requirements. The news outweighed any possible benefit from a better than expected Australian Consumer Sentiment report sending the AUD/USD lower in local trade. The Aussie dollar entered offshore exchange below technical support at 0.9175 exchanging at around 0.9150. The trend continued overnight as EUR/USD sustained its recent downtrend taking AUD/USD to this morning's open on its lows around 0.9080. Lower commodity and equity prices are also weighing on the Aussie dollar this morning as the Asian markets prepare for the release of Chinese GDP and CPI data today with expectations of economic growth over 10% and annual inflation of 1.5%.

- We expect a range today in the AUD/USD rate of 0.9025 to 0.9125

:: Great Britain Pound: The Pound Sterling received some positive news overnight with U.K employment reports indicating that the economy is beginning to create employment. The number of people claiming unemployment benefits declined by 15,200 representing 5% of the workforce, beating economist forecasts for a decline of around 4,500. Despite the relatively upbeat data the release of the BoE minutes to its policy meeting earlier this month revealed that although the economy has commenced expansion it was still growing weakly and there would still be significant headwinds. The Cable jumped from 1.6285 in early London exchange to post a high of 1.6325 however continued support for the Greenback and the dampening effects of the BoE minutes sees it open this morning exchanging around yesterdays Asian close at 1.6285. The GBP/AUD cross rate opens on its highs around 1.7930 following a sell-off in the Aussie dollar and a stable Pound with resistance above the psychological 1.8 level being watched closely by the market.

- We expect a range today in the GBP/AUD rate of 1.7850 to 1.8050

:: New Zealand Dollar: After exchanging on its highs near the 74 cent handle heading in early local trade yesterday the NZD/USD fell dramatically following the release of the fourth quarter Consumer Price Index. Economists had forecast a relatively flat reading with general consensus being around 0% however the -0.2% result caught the market by surprise triggering a swift move lower. The Kiwi entered offshore trade below 73 cents with concerns over its future prospects escalating thanks mainly to nervousness surrounding Chinese credit restrictions. The NZD/USD opens this morning 2.8% lower than yesterdays high exchanging near its lows at 72 cents with N.Z November Retail Sales data scheduled for release today.

- We expect a range today in the NZD/USD rate of 0.7130 to 0.7250

:: Majors: The Euro suffered a 1.1% drop down to a low 1.4252 overnight versus the dollar after opening offshore trading at 1.4410. Germany's ZEW survey revealed a decline in economic sentiment, echoing the views of broader Europe. Continued concerns over the budget deficits of Greece and other European nations continued to erode the Euro forcing European finance chiefs to seek auditing powers over national governments as Greece's situation spreads, affecting other countries. Throughout European trading lack of support for the Yen increased as the country's consumer confidence deflates to its lowest level in 6 months. Withdrawal by the market continued overnight as stronger than expected US TIC Flows underpinned both Yen and Euro.

:: Data Releases:

  • AUD: Dec New Motor Vehicle Sales
  • NZD: Nov Retail Sales & Dec Business PMI
  • USD: Weekly jobless Claims, Dec Leading Indicators & Jan Philadelphia Fed Surevey
  • GBP: Dec Public Sector Net Borrowing & Jan CBI Quarterly Trends
  • EUR: Jan PMI
  • JPY: Nov Leading Index
  • CNY: Q4 GDP, Annual CPI, Annual Industrial Production & Annual Retail Sales