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The commodity currencies are outperforming on the day thus far, led by the resilient Aussie which has rebounded quite nicely on Wednesday despite Tuesday’s less than impressive current account and more dovish than expected outlook from the RBA. The impressive GDP release has undoubtedly factored into the relative strength of the single currency after coming in at 0.6% m/m versus an expectation of 0.2%. Treasurer Swan has also come out with a mixed bag of comments, saying that government stimulus will be withdrawn, unemployment will continue rising, the recovery will continue to be challenging, and rates are at emergency low level and will need to be adjusted at some point. In Japan, the Yen has benefitted from some early gains on the back of comments from DPJ Otsuka who says that the party won’t meddle in BOJ policy and market operations including JGB buying. Earlier, Dallas Fed President Fisher said that the US “too big to fail” issue may have grown worse. While offered against the commodity bloc, the USD is better bid against the major currencies and unched against the Yen. Asian equities are well offered on the day, while US equity futures point to a slightly higher open. Commodities are moving in opposing directions with oil bid and gold offered. Looking ahead, key data releases in Europe come in the form of UK PMI construction data (48.0 expected) at 8:30GMT followed by Eurozone GDP (-0.1% expected) and PPI (-0.6% expected) at 9:00GMT.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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