The ongoing Eurozone debt crisis and threat fear of contagion from the peripheral into the core economy continues to dominate trade, with investor risk appetite diminishing quite rapidly. This has weighed tremendously on the Euro and currencies in general, with the US Dollar standing out as the prime beneficiary. Also seen propping the buck have been some hawkish comments from Fed Bullard who says that the Fed may have to considering tightening if growth in the second half of the year is strong. Meanwhile, the latest surge in the Franc against the Euro has Swiss central bankers once again concerned, with SNB Jordan coming out on the wires and saying that he is “very worried” with the strength of the Franc.
One currency which continues to defy gravity however, has been the New Zealand Dollar, which remains very well bid in recent sessions on the back of a well received government budget and most recently, a higher than expected annual inflation forecasts. Elsewhere, chatter that Moody’s could be looking to place UK banks on review for downgrade as soon as today has been weighing on the Pound a bit, especially after an official downgrade on the UK’s local and foreign currency long-term sovereign credit rating came from a Chinese local rating agency on Tuesday.
Looking ahead, German GDP and German IFO will take center stage in European trade, while Uk public finance data will also be watched closely. On the official circuit, Fed Rosengren is also slated to speak in the European session on the topic of financial stability at 6:00GMT. US equity futures and commodities are recovering from the previous daily setbacks and track mildly higher on the day thus far.
ECONOMIC CALENDAR
Joel Kruger
Technical Currency Strategist
DailyFX Research Team
www.dailyfx.com
