OPENING COMMENT
Getting back into the full swing of things on Tuesday, following Monday’s holiday lightened trading session. The New Zealand Dollar, which had lagged on Monday, has recovered formidably into Tuesday thus far, with Kiwi outperforming all other major currencies. Nevertheless, FinMin English has come out with some cautionary remarks after saying that he expects unemployment to continue to rise. Meanwhile, the story for Sterling is the same, with the pound weakening yet again across the board, despite healthy readings from UK BRC retail sales and RICS house prices. Traders have been more focused on the effectiveness of quantitative easing in the UK. Although Australian business conditions slipped unexpectedly for the first time in four months, this did not prevent the Aussie from staying close to its 2009 highs just under 0.9100. In Japan, loan growth continued to slow for the ninth straight month. Some investors have become increasingly concerned with the Eurozone’s ability to deal with the credit crisis after the Dutch central bank took control of DSB Bank on Monday. Geopolitical tensions have also escalated after North Korea reportedly fired five short-range missiles off of its east coast and is now preparing more missiles to test off of its north and west coasts. The Canadian Dollar has emerged over the past day, with the single currency accelerating gains against the USD to a fresh 1 year high. Stronger employment data has helped to fuel optimism over the prospects for a global recovery, while also generating speculation of a potential rate hike from the BoC. There has been more talk overnight on continued efforts from China and Russia to shift away from USDs and this has not been helping the buck. Looking ahead, Swiss producer and import prices (0.1% expected) are due at 7:15GMT, followed by UK CPI (0.3% expected) at 8:30GMT. Also out in the UK at the same time are the retail price index and DCLG house prices. Finally, the German ZEW (58.8 expected) caps things off at 9:00GMT. US equity futures are unched, while commodities track marginally lower.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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