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Australian Dollar:  An easing in the growth of producer prices for the September quarter had little impact on the Australian Dollar as investors remain focused on overseas events. A slight pull back from 0.8% to 0.6% was of little concern as its the high Australian dollar that continues to keep producer import prices down; a reported increase in Chinese Flash Manufacturing PMI also helped support the Aussie in its local hours along with boosting commodity prices in general. Touching session highs of 1.0410 off the back of this report, the Aussie moved into offshore trade around the $1.04 handle and as speculation of a resolution to the Greek debt crisis mounted our dollar climbed higher. Poor manufacturing and services data from the Euro zone did lead to a slight pullback, as the R-word (recession) crept into investors thoughts although the aforementioned Chinese data counteracted these fears for the time being. Reaching highs just shy of 1.0500 the Australian Dollar opens this morning at 1.0470/80 with events in Europe still expected to dictate market movements.
 
New Zealand Dollar:  Positive economic data from China gave the New Zealand Dollar the boost it needed to break through the 80 cent handle during local hours yesterday. With fears of a hard-landing for China easing, a rally in commodity prices ensued and thus the Kiwi consolidated comfortably above 80 cents. Uncertainty surrounding Europe’s second summit on Wednesday will keep a lid on any risk rallies before then although New Zealand’s dollar does have local CPI data this morning to look to for any clues as to the RBNZ meeting scheduled for Thursday. Higher than expected consumer price inflation for the previous quarter will boost speculation of an interest rate hike and thus would be positive for the New Zealand Dollar. Opening this morning the Kiwi trades at 0.8070 against the Greenback and 0.7710 against the Aussie.
 
Great British Pound: The Great British Pound has briefly touched $1.60 against the US Dollar overnight as hopes build for a decisive and positive plan to emerge from the Euro zone on Wednesday. Gains afforded by the current market situation have been limited towards the Pound however as many remain concerned for the effect of the European turmoil on growth of the UK economy. Contraction of manufacturing and services sectors in Europe has once again highlighted fears the economic pull-back will also hinder UK growth. This morning Sterling sits just below 1.6000 at 1.5990 and exposure to the Euro-zone has pulled the Pound back against the Aussie and Kiwi, where it trades at 1.5260 and 1.9800 respectively.
 
Majors: Optimism is continuing to build in relation to tomorrow’s second European summit as investors use more and more clues to refine their expectations. The Euro rallied to a six-week high of 1.3950 by the close of the Asian session however worse than expected PMI data for the region along with concerns for the level of Greek haircuts being considered by the European Union knocked the single currency down from these highs to nearly touch 1.3820. Surveys showed both the manufacturing and services sectors in Europe contracted more than expected, and as last month’s figures told the same story, investors are becoming more and more wary of the risk of recession. The earlier release of positive Producer Price Index (PPI) from China did help balance these fears however as continuing growth from the world’s largest emerging economy helped balance these fears. Opening today the Euro is trading at 1.3920 against the Greenback and the Japanese Yen remains strong ahead of its central bank meeting this week at 76.05.
 
Data releases
AUD: CB Leading Index m/m
NZD: CPI q/q
JPY: No data due for release
GBP: Current Account; BBA Mortgage Approvals
EUR: GfK German Consumer Climate; Belgium NBB Business Climate
USD: CB Consumer Confidence; S&P/CS Composite-20 HPI y/y