Opening Comment 05.13
As such, all major currencies have been tracking higher on the day, with the Australian Dollar leading the way on the back of its higher yield appeal and some encouraging data results on the domestic front.
Australia’s April employment report has come in impressively strong, and the resilience of the local economy, even in the face of a broader global macro crisis, continues to make the antipodean a very attractive investment. While RBA Lowe was out expressing some concern over the potential contagion from the Eurozone, the central banker remained highly optimistic on his outlook for the Chinese economy.
A WSJ survey of economists has been getting some attention over the past several hours after revealing that 42% polled now feel that the Fed will hold off on raising rates until 2011 or beyond. This compares with only 28% a month earlier, which clearly suggests that the Eurozone debt crisis is factoring in to interest rate expectations. Meanwhile, Brazil FinMin Mantega has been on the wires expressing a different opinion, urging the Fed to raise rates so that the USD will rally. Mantega blames the US for global imbalances and is critical of a notable trend in advanced economies that intentionally weaken their currency to drive exports.
On the data front, Japanese loan growth continued to shrink, while the current account surplus widened and was well better than expected. Elsewhere, UK nationwide consumer confidence was released and although the data came in a point better than expected, it failed to show a recovery from March’s concerning 9 point drop, leaving room for some relative Sterling weakness.
Looking ahead, the ECB monthly report is due at 8:00GMT, followed by some UK data at 8:30GMT, in the form of trade balance (-2.5B expected), and DCLG house prices. US equity futures and commodities track marginally lower in early Thursday trade.
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