OPENING COMMENT
President Obama has warned about removing stimulus too soon but is also strongly opposed to a second stimulus package. Sterling is the strongest currency on the day with the much better than expected RICS data driving the relative outperformance after showing the first rise in prices in over 2 years. The US Treasury is reportedly in the process of discussing the sale of its $7.7B/34% stake in Citigroup. The RBA Minutes came out and were less hawkish than many had been expecting, with the central bank only saying that economic conditions pointed to a future rate hike. There had been the expectation that the RBA would be more aggressive in their language to indicate a tightening just around the corner. This was also somewhat of a letdown for Aussie bulls after Treasurer Swan was earlier with a more upbeat and hawkish tone. Second tier Aussie data was also weaker than expected and this resulted in the single currency underperforming relatively. Price action in Usd/Chf is also notable, after the pair managed to break to fresh 2009 lows on Tuesday by 1.0320. Overall sentiment remains on edge in light of the latest escalation in the China-US trade rift, with a WSJ article saying that this is just the tip of the protectionist iceberg. Looking ahead, key economic releases in the European session come in the form of Swiss industrial production (7.3% expected) at 7:15GMT, UK CPI (0.3% expected) and UK DCLG house prices (-9.5% expected) at 8:30GMT, and German ZEW (60.0 expected) at 9:00GMT.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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