The Asian markets began with a shock as the Reserve Bank of New Zealand unexpectedly cut interests by 25 basis points to 8%. Kiwi promptly broke lower from the .7500 area to below .7450 and has had trouble getting back over that level since then. To add fuel to the fire, the RBNZ, based on the economic and inflation outlook, expects to cut further.
While the USD was well bid during the NY session and against NZD, we saw the USD drift lower albeit not at the same pace of selling we saw a few weeks ago. USD/JPY trickled lower after failure of 108.00 and EUR?USD held the NY session lows. Meanwhile, EUR/JPY is bumping along the 169.00 level after a failure of 170.00.
Looking forward, markets appear to be shifting. We have had a sharp pull back in commodities as well as a corresponding move higher in the USD. Equities have rallied sharply off their lows and we have seen a sell off in EUR which appears to be acting as a 'safe haven' currency. Is the market changing? As is always the case we won't know until we look in the rearview mirror but the volatility and uncertainty should continue to offer ample trading opportunities.
Upcoming Economic Data Releases (London Session):
- Germany: (7:30GMT) PMI Manufacturing and Services. (8:00GMT) IFO Business Climate, Current Assessment, Expectations.
- UK: (8:30GMT) Retail Sales.
