The much stronger than expected German factory orders on Monday, and some assurances over Hungary’s fiscal situation have definitely helped the situation, while lack of any fresh bad news can also not be discounted as a reason for the broader stabilization.
The latest interview of Ben Bernanke has been getting some attention, with the Fed Chair openly discussing all of the relevant subjects impacting the domestic and global economy. Bernanke says the recovery in the US probably began last summer, but also concedes that the pace of recovery will be slow, while remaining highly concerned over the state of the labor market. On the topic of Europe, the Fed Chair says that the Fed is doing everything it can to help, but says more money may be needed to stabilize the region. Finally, on the topic of monetary policy, Bernanke says that the process of rate tightening will begin before the economy is back to full employment.
Other officials on the wires overnight include the RBA’s Broadbent who remains strongly optimistic on the outlook for the Australian economy, and Portugal’s economic minister Da Silva who says that currency stability is important but it is also difficult to say whether the Euro has fallen enough to help the local economy.
It seems as though the Bernanke comments for more money to the Eurozone, and hints at near-term rate tightening, along with bearish Euro comments from the Portuguese econmin could ultimately continue to weigh on the Euro as trade picks up on Tuesday. It is also worth noting that despite the latest consolidation, US equities did still close lower on Monday, which is an added reason to be less bullish on currencies and more bullish on the USD.
On the data front, Japanese economic releases were highlighted by a widening out of the current account surplus, and a shrinking of loan growth, while in Australia, NAB business conditions and business confidence readings showed deterioration from previous prints.
Looking ahead, Swiss unemployment (3.8% expected) is due at 5:45GMT, followed by German trade balance (Eur15B expected) at 6:00GMT. Swiss CPI (0.0% expected) is then due out at 7:15GMT, with German industrial production (0.7% expected) capping things off for the European calendar at 10:00GMT. US equity futures have rebounded and point to a higher open, while oil is also marginally higher. Gold is slightly lower.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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