Opening Comment

OPENING COMMENT

A very quiet session of trade in Asia thus far and ahead of the European open with the markets content on some tight consolidation for now. The Euro, Yen and Swissie are only marginally higher against the USD, while all other major currencies are a tad lower. For now, it seems as though Asian traders are unclear on whether to commit to the latest bull-run in the Greenback. While it would be premature to sell the buck in the face of the recent barrage of ramped up USD supportive rhetoric from the likes of Fed Chair Bernanke and Treasury Secretary Paulson, it would also be premature to assume that we are in any way on the verge of any material medium-term USD rally.

The Australian Dollar has once again been underperforming, albeit only slightly on Wednesday, with the single currency initially propped by a better Westpac leading index, but then weighed back down to trade lower on the day following a weaker wage cost index reading. Also seen weighing of late on the higher yielding currencies has been the reduction in global risk appetite brought on by some downbeat outlooks from the IMF, and an overvalued assessment of US stocks from Meredith Whitney. Elsewhere, on the final day of President Obama’s trip to China, a prominent economist and adviser to the PBOC, has said that he sees the risk of a double dip recession in the US, that is not likely in China.

Looking ahead, the Eurozone current account is due at 9:00GMT, followed by the BOE Minutes at 9:30GMT. Eurozone construction output is then released at 10:00GMT, with UK CBI industrial trends capping things off at 11:00GMT. At present, US equity futures are only mildly offered, while commodities are mixed with oil higher and gold lower.

 

Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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