Opening Comment 03.29
The interesting thing is that currencies look to be reverting back to traditional correlations, with the better bid commodity currencies at the top of the performance chart, and more importantly, the lower yielding, safe haven currencies, at the bottom. While it is no surprise to see the Yen underperforming, it certainly is a bit of a surprise to see that the Swissie is the weakest currency on the day. This follows a prolonged period of some relative Swissie strength, that had the Eur/Chf cross dropping to record lows over the past few days. However, Eur/Chf stands out on the day, with the cross seeing some heavy buy related interest thus far ahead of the European open.
The Euro is the next best bid major currency behind the commodity bloc and many are attributing the strength in the single currency to the favorable response to the official Greek restructuring plan. ECB Weber and Nowotny have also helped to keep the single currency propped following some upbeat comments over the weekend with respect to their outlooks for the local economy. Elsewhere, Sterling has been weighed down on Monday, with a weekend FT report generating some attention after it highlighted that many UK based hedge funds have made hundreds of millions betting against the Pound this year. On the data front, Japanese retail sales has come in stronger than expected, while Australian HIA new home sales has failed to materially weigh on the Aussie after showing a significant drop from the previous print and well into negative territory.
Looking ahead, UK money supply, net lending (1.4B expected), consumer credit (0,4B expected), and mortgage approvals (48.4k expected) are all due at 9:30GMT, followed by Eurozone services confidence (2 expected), industrial confidence (-11 expected), business climate (-0.80 expected), consumer confidence (-17 expected) and economic confidence (97.1 expected) at 10:00GMT. US equity futures are looking healthy and point to a firmer open, while commodities are mixed, with oil showing some solid gains, while gold lags and trades marginally lower.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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