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Opening Comment 05.27

Opening Comment 05.27

2010-05-27 04:41:00
Joel Kruger, Technical Strategist
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However, ultimately, this was not to be the case, with currencies once again rolling over in the North American session, led by weakness in the Euro. The Euro was by far the biggest loser, with the market trading back below 1.2200, and stalling just shy of the recent 2010 lows by 1.2145 thus far. Talk of more troubles in the Spanish banking sector, warnings from OECD that Germany and France might not be able to manage additional losses from Spain and Portugal, and an FT article that China was reviewing its Eurozone government bond holdings, were all seen weighing heavily on the Euro. 
 
As a result, the USD remains very well bid on its safe haven appeal, and is actually finding some added bids on the recovery prospects for the US economy, which now seems to be much better positioned than it had been several months back. Fed Lacker has even gone as far as downplaying any impact the current Eurozone debt crisis may have on the US economy, after saying that the crisis would only shave a “a tenth or two” off of his growth forecasts for this year. 
 
The commodity currencies have been relatively better bid over the past few hours, particularly against the Euro, with Aussie finding some renewed bids after a report in a local paper said that the government was moving towards a major back-down on its proposed 40% super resources tax. But it is also worth noting that a much weaker than expected Australian private capital expenditure reading has slowed the Aussie rebound somewhat on Thursday.  Meanwhile in New Zealand, trade data came out much better than expected, with the economy showing its first trade surplus for the first time since July, 2002. Finally, Japan also managed to post a better than expected trade number 
 
Looking ahead, another light calendar in European trade, with the only key releases coming in the form of Swiss employment at 7:00GMT, and UK CBI distributive trades at 10:00GMT. US equity futures and commodities have managed to recover from Wednesday’s lows and track higher on the day thus far.  
 
 
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com 
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