Opening Comment 03.24
Although we have now seen France jump on board with Germany in calls for IMF involvement in a Greek rescue plan, traders have interpreted this as more of a negative, with the development reflecting the Eurozone’s inability to independently handle its own matters.
We have even seen gains in the buck against the Yen, although the Japanese currency has been hit the least hard on the day. A better than expected unadjusted trade surplus out from Japan has failed to materially influence price action. The New Zealand Dollar is the weakest currency on the day to this point, with the antipodean getting hit hard on some very disappointing current account numbers and news that rating agency Fitch would not be looking to upgrade the country’s negative outlook.
The Euro now sits just over the recent 2010 lows by 1.3440 and it looks like these barriers could finally be taken out with the single currency also very weighed down by some heavy cross related selling in Eur/Chf which now trades by record lows. Any comments from the SNB of potential intervention are now seen as empty threats, and until decisive action is taken, market participants will continue to force the cross lower.
Fed Yellen was out in Asia with some dovish talk after saying that a lower USD could actually be beneficial to the economy, with the weaker currency helping to bolster exports. However, Yellen also conceded that accommodation would easily be removed as soon as the time was right.
Though the Australian Dollar has been tracking lower on the day in response to broader price action, the higher yielding currency has managed to retain some mild bids on the back of better secondary data in the form of job vacancies. Global equities have managed to also provide some additional relief in an otherwise gloomy environment, with the not as bad US housing data from Tuesday helping to support equity bids. Finally, ongoing tensions between the US and China relating to the Yuan exchange rate remain in focus and could be on the verge of escalating over the coming days as pressures for China to implement change continue to mount.
Looking ahead, German data kicks things off at 8:30GMT and 9:00GMT in the form of PMI (56.8 expected) and IFO (100.9 expected) respectively. Also out at 9:00GMT are Eurozone PMIs (52.0 expected), with Eurozone industrial new orders (13.9% expected) capping things off at 10:00GMT. US equity futures point to a lower open, while commodities are also offered led by crude oil weakness.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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