Opening Comment 03.10
Perhaps some earlier comments from FinMin English that the government would end its wholesale funding guarantee for banks, in light of better market conditions, has helped to bolster the currency somewhat. The RBNZ is set to meet later today and while it is widely expected that the central bank will leave rates on hold at 2.5%, it will be interesting to see what the accompanying policy statement has to offer. Early indications seem to be favoring a more hawkish stance.
The Australian Dollar also continues to outperform the major currencies, with the antipodean tracking higher on the day despite some discouraging data. While consumer confidence did manage to improve from the previous print, the much weaker than expected home loans data is more than unsettling and could begin to act as a strain on any additional Aussie gains. RBA Lowe was also on the wires talking of the challenge of growing the economy without generating inflation, while also warning of his concerns over a potential deterioration in the housing market. Elsewhere, in Japan, some secondary data including softer machine orders, failed to materially factor into price action.
Looking ahead, a batch of German data is slated for release at 8:00GMT including; trade balance (14.5B expected), current account (15.0B expected), imports (1.2% expected), exports (0.5% expected), and CPI (0.2% expected). UK industrial production (0.3% expected) and manufacturing production (0.2% expected) are then out at 9:30GMT and cap things off for the calendar in European trade. US equity futures and commodities are both relatively flat.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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