:: Australian Dollar: As expected the Reserve Bank kept interest rates on hold at 3% yesterday with the major surprise coming in the form of a much lower than expected Current Account Deficit in the first quarter of the year. A big surge in exports thanks mainly to an increase in competitiveness due to a weak AUD saw the deficit reduced from 6.3 billion to 4.6 billion, well below forecasts of a drop to around 5.5 billion. The news was enough to have some economists immediately readjust their predictions for todayë­© GDP with many actually suggesting the local economy may be able to avoid a technical recession based on the strong growth in export earnings. The Aussie dollar held firm above intraday support at 0.8050 and traded higher throughout the offshore session breaking through the 82 cent barrier during U.S exchanges to open around these levels in early morning trade.

- We expect a range today in the AUD/USD rate of 0.8120 to 0.8250

:: Great Britain Pound: With several key pieces of U.K economic data released overnight the Pound Sterling continued to skyrocket, trading near 1.6600 in exchange with the Greenback late in the session. The springboard for the rally came from a positive construction PMI, strong Mortgage Approvals and an increase in net consumer credit all of which were better than economist forecasts. This morning sees the Pound open trading at 1.6575 against the big dollar whilst the cross rate is marginally lower at 2.0200 thanks to another big jump higher on the Aussie dollar.

- We expect a range today in the GBP/AUD rate of 2.0120 to 2.0280

:: New Zealand Dollar: A relatively upbeat assessment on the outlook for economic growth in New Zealand from the NZIER has added support to the Kiwi dollar. The institute said there were igns of life in leading indicatorsand that they are autiously optimistic about a recovery from later this year. The recovery is expected to come on the back of the large government and central bank stimulus as well as an increase in migration. With the Greenback continuing to come under punishment from offshore the Kiwi dollar edged closer to 66 cents and opens this morning around 0.6550.

- We expect a range today in the NZD/USD rate of 0.6510 to 0.6610

:: Majors: The recent run higher on the Euro appeared to be reversing in early offshore trade as EUR/USD slid from 1.4180 to 1.4100 following a larger than expected rise in Euro-zone unemployment rate and comments from German Chancellor Angela Merkel. The Chancellor said the ECB ë°·owed somewhat to international pressurelast month in announcing its plan to start buying assets in a clear indication that she is not very comfortable with this approach. Despite the negative start to the session traders took it as an opportunity to sell more U.S dollars sending EUR/USD straight back up to take out the highs near 1.4250 made earlier in the week. The gains were extended during U.S trade as equity markets finished in positive territory for the fourth consecutive session following a much better than expected Pending Home Sales for the month of April.

:: Data Releases:

  • AUD: Q1 GDP
  • NZD: No Data Expected today
  • USD: May ADP Employment, Apr Factory Orders & May ISM Non-Manufacturing Composite
  • GBP: May PMI Services & BRC Shop Price Index
  • EUR: May PMI Services, Q1 GDP & Apr PPI
  • JPY: Q1 Capital Spending
  • CAD: No Data Expected today
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