European Open: Roses are red, violets are blue, USDJPY’s in the red, and the Nikkei is too

FXStreet (London) - Overnight, the Asian session saw a broadly risk-off tone. The Nikkei lost 1.53 percent, sliding from 14,678.71 to 14,243.17 through the session. However, the Nikkei took the brunt of the equity bearishness.

The Reserve Bank of Australia assistant governor Christopher Kent gave a speech, in which he addressed Aussie dollar strength, something that had been less played up in the last RBA rate decision. He said that the Aussie dollar had been pushed up because Australia had not been hit hard by the banking crisis. "The expansions of their balance sheets have, for some time, worked to reduce yields on financial assets in these economies”

"The fact that they are still playing out may have continued to provide some support to the Australian dollar beyond the time at which the terms of trade and the interest rate differential had begun to decline."

Adding that: ““lower levels of the exchange rate will assist in achieving balanced growth in the economy” helped to jawbone the AUD a little lower overnight before rebounding back into bullishness.

Provisional GDP figures for the Eurozone are set to be released this morning. Consensus expectations are for a quarter-on-quarter gain of 0.4 percent after last quarter’s -0.3 percent drop.

Consensus expectations are for Canadian manufacturing sales to print flat, however the biggest risk is to the downside on weaker demand from the US and the effects of below-normal temperatures and adverse weather conditions in North America.

US industrial production and consumer confidence numbers are due today. Expectations are for a further 0.3 percent rise in industrial production, matching the December rise. The February Michigan Consumer Sentiment Index is forecast to see a decline to 80.6 from 81.2 in January.

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