By Danica Hampton NZD/USD spent the night going sideways, within a 0.5280-0.5330 range. In the wake of yesterday's RBA minutes there's been quite a lot of focus about the possibility of further RBA rate cuts. Much focus has centred on a Terry McCrann (who is rumoured to have an ear to the RBA) article, which suggests the RBA will "almost certainly" cut interest rates 50bps at its next meeting in April. Despite the increased speculation about near-term RBA rate cuts, NZD/AUD has held steady within a 0.8000-0.8060 range. Perhaps, the revised RBA easing expectations simply even the balance after Monday's awful manufacturing data saw economists revise down their picks for NZ's Q4 GDP (from -0.6%q/q to -1.1%). Overnight, the global economic data was relatively upbeat. UK house prices fell less than expected, the German ZEW Business survey surpassed expectations and the US housing data painted an encouraging picture (housing starts rose 22% and building permits rose 3% in February). European equities fell modestly, but US equities pushed higher bolstered by the rosy US data and strong gains in technology stocks. The S&P500 is currently up 2.2%. While the overnight news was relatively encouraging, currencies stayed range bound. There is a lot of talk about option strikes and expiries and this seems to be keeping currencies hemmed in. It's also worth noting, the "fair value" range for NZD/USD (as implied by our short-term valuation model) is currently sitting at 0.5175-0.5375 (up from last week thanks to a widening of NZ-US interest rate spreads). As a result, there's isn't really a compelling fundamental reason to chase the NZD/USD significantly higher or lower from here (unless you're expecting further changes in NZ-US interest rate spreads, NZ commodity prices or risk appetite). For today, we look for NZD/USD to continue treading water within familiar ranges. We suspect dips in NZD/USD will be limited to 0.5280. On the topside, initial headwinds are expected around 0.5330, but a push higher towards 0.5400 is possible if equities and risk appetite continue to recover. The USD spent the night going sideways, as investors digested a slew of better than expected global data and mixed equity markets. Last night's European economic news tended to surprise on the upside. In the UK, DCLG house prices "only" fell 11.5%y/y in January (slightly below than the -11.7% forecast). While in Germany, the ZEW Business Survey also surpassed expectations. The economic sentiment index rose to -3.5 (vs. -8 forecast) and the current situation index rose to -89.4 (vs. -90 forecast). Across the Atlantic, in the US, the economic data was also upbeat. Housing starts climbed a massive 22% in February to 583,000 (vs. 450,000 forecast). Building permits rose 3% in February to 547,000 (vs. 500,000 forecast). The uptick in the housing market indicators are an encouraging sign for the US economy. While equity markets across Europe fell modestly, the upbeat US housing data and strong gains in technology stocks (after a broker gave an upbeat assessment of bellwether Cisco Systems) saw US equity markets climb. The S&P500 is currently up 2.2%, which is 14% above the low seen on March 9. Despite the fairly upbeat data and gains on Wall Street, EUR/USD spent the night trading choppily within a 1.2930-1.3030 range. A chorus of ECB council members also spoke last night. Mersch said the ECB wasn't avoiding zero interest rates out of principle, but it wasn't necessarily the most effective policy measure. Draghi said the "margins for action with monetary mechanisms are limited". Stark said "we have a little more wiggle room on reducing rates". In essence, the message seems to be, while the ECB still has some scope for cutting interest rates, it's probably getting close to a low-point. Last night, the Swiss National Bank Chairman Roth reiterated the central bank's commitment to keeping the CHF from strengthening. Meantime, the Swiss government have recently slashed its economic forecasts and are now predicting the worst recession since 1975. For currencies, the big question is whether or not the recent rebound in risk appetite and equity markets will be sustained. Last night's economic news has certainly gone some way to shoring up confidence. But risk appetite is fickle and could easily turn on a dime. Later today the Bank of Japan will make its monetary policy decision, ahead of the UK jobless data, Bank of England minutes and the FOMC policy update first thing tomorrow morning. * Danica Hampton is BNZ's Currency Strategist. All of the research produced by the BNZ Markets team of economists is available here.