Opening Comment 03.09
The same holds true for Sterling and Swissie, while the Yen is in the process of rolling back over after mounting an impressive three day rally. The Pound has come back under pressure and is one of the weakest currencies on the day, with many attributing the relative underperformance to a very disappointing RICS house price reading. The single currency has already been at risk given the high degree of uncertainty about the upcoming elections and ongoing concerns over the strength of the economy. UK BRC sales also were out and came in on the stronger side, but failed to materially influence price action.
Talk of a near term revaluation of the Yuan has been generating a lot of attention in the currency markets over the past 24 hours, with Dr. 'Doom' Roubini saying that China could end its dollar-yuan peg as soon as next month. However, many have taken the reval talk with a grain of salt, especially in light of recent comments from PBOC governor Zhou who has said that the global recovery is not solid and that China must be very cautious in the timing of normalizing its policies, which includes a yuan revaluation.
Elsewhere, the Yen crosses have come back under pressure on talk of Japanese repatriation, while lower equity prices and a higher USD could also be factoring into the flight to safety price action. Other data released overnight includes; improved business confidence in Australia, which has helped to prop the Aussie somewhat, and some secondary Japanese leading index and coincident index indicators that have failed to move markets. Looking ahead, Swiss CPI (0.2% expected) is due at 8:15GMT, followed by the UK trade balance (-7000 expected) at 10:30GMT. US equity futures and commodities are both tracking marginally lower on the day.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
If you wish to receive Joel's reports in a more timely fashion, e-mail firstname.lastname@example.org and you will be added to the "distribution" list.
If you wish to discus this topic or any other feel free to visit our Forum page
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.