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Australian Dollar: The Australian Dollar breathed a sigh of relief yesterday following a barrage of negative news over the weekend and earlier on this week. With shaken investors taking tentative steps back towards riskier assets the Australian Dollar faltered only once to an intraday low of 0.9780 before rallying to touch 99 cents by the switch to London hours. Heading offshore risk sentiment continued to improve on speculation European Leaders are taking promising steps towards a debt crisis resolution, however short-term it may be. After touching a high of 0.9975, the prospect of parity was denied and we open still above 99 cents at 0.9910. Locally we have HIA New Home Sales due for release later this morning; however the main market influences are to remain with developing events from Europe until at least the end of this week.

New Zealand Dollar:  After a battering of equities and commodities, including the New Zealand Dollar, since mid last week a calm in the storm appears to be emerging. Confidence the urgency of action has resonated with European Leaders riskier assets has helped riskier assets pare some recent losses and the Kiwi has bounced from weekly lows of 0.7670 to touch very briefly on 0.7950. Softening slightly we open this morning at 0.7890 against the Greenback and with nothing scheduled for release locally, eyes will remain focused on overseas events. Against the Australian Dollar the New Zealand buck has made modest gains opening at 1.2554 (0.7965).

Great British Pound: UK Retail sales saw their worst performance for 16 months a survey showed overnight, as the CBI business group reported 39% of businesses claimed a monthly fall in sales. Bringing to light the impact of high unemployment, low wage growth and high inflation the fragility of the UK economy is once again in the spotlight. Sterling fell to a session low of 1.5530 although as events took place in neighbouring Europe increased investor confidence helped the Pound retrace its steps to test 1.5700. Opening this morning at 1.5626 against the Greenback, Sterling is very slightly lower against the Aussie at 1.5780 and also the Kiwi at 1.9810.

Majors: The US Dollar and the Japanese Yen lost ground yesterday as confidence spreads European Leaders are close to an agreement to help contain the regions debt crisis. German Chancellor Angela Merkel said her country will do what it can to help Greece meet the terms of its bailout package and Greek Prime Minister secured parliament support for the expansion of the European Financial Stability Fund. The Euro rallied to a high above 1.3650 before settling to open this morning around the 1.3590 level. Adding to the pull back of the Japanese Yen yesterday were words from the nation's finance minister Jun Azumi, when he said they would take necessary steps to halt the appreciation of the Yen. In a country reliant on its export industry, large companies are feeling the effect of a strong local currency and speculation of a central bank intervention has once again emerged. The Yen retreated from 76.30 levels seen in the Asian session to an intraday low of 76.90, and opens this morning just off this low at 76.80.

Data releases
 
AUD: HIA New Home Sales m/m
NZD: No data due for release
JPY: No data due for release
GBP: BOE Credit Conditions Survey
EUR: German Import Prices m/m; German Prelim CPI m/m
USD: Core Durable Goods Orders m/m; Crude Oil Inventories