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Traders Disregard IFO Jump

Some morning strength in commodities boosted the Australian dollar against the Euro, despite a promising IFO figure and more hawkish backing by European officials.  According to the mornings report, sentiment in the European Union was breaching 15- year highs as all components, including current and business sentiments, lead to rising speculation of further rate hikes in the economy.  Additionally, comments from both officials Garganas and Hurley backed yesterdays hawkish bias by policy makers Quaden and Mersch, fueling the fire of further near term rate hikes.  However, speculation of an even more aggressive Fed policy rate hike this Thursday looks to be taking the wind out of the Euro sails as rumors continue to circulate of a possible 50 basis point rate hike followed by even more hawkish rhetoric.  As a result, tomorrows German GFK may present some interim directional bias should the survey match todays IFO report.  This should counter some commodity based interest against the Aussie in the near term.

NZDJPY

Cross Bounces On Yen Bearishness

The kiwi saw some buying against the Japanese yen as pressure continues to weigh on the Japanese counter following further speculation of Fukuis interests in the current investment scandal.  Continuing to be backed by the headline governments representatives, <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Fukui looks to be losing favor among the countrys constituents as it seems as the number calling for his resignation is rising.  This could place further downward pressure on the Japanese domestic currency as some are expecting an end to rate hike speculation should the Governor leave office.  Nonetheless, economic fundamentals continue to purport an expanding economy with tonights focus being placed on the retail trade figures for the month.

Rumorville

Some strength looks to be on the horizon for the USDJPY leg of the cross as selling is capping the days gains at 116.70.  Further selling should be expected prior to the 117 barrier option with further barriers higher at 118.  Heading into the Asian session, bids are looking to keep the underlying range bound and supported with buyers emerging at the 115.50 and 116 figures.

NZDUSD

Kiwi Heads Higher Despite Confidence

Risk aversion was not an issue on this graveyard like session as ranges were pressured to almost nothing on the day.  Moving the most, points wise, the Kiwi rose against the dollar major despite bearish news from the Westpac-McDermott Miller consumer confidence survey.  According to the report, the data fell to a six year low in June as consumers continues to fret about higher costs and become hesitant to spend.  The days moves were also contrary to the dollar repatriation out of emerging market countries as risk aversion continues to be the predominant theme, albeit in the near term.  As a result, tomorrows May trade data will play an increasingly important role.  Should the balance turn to a whopping deficit, traders may extend further losses as it becomes increasingly clear that the economy may be headed lower.

Rumormill

Underpinning the major in the Asian session, buyers are surfacing at the 0.6020 figure and lower, with a bulk at 0.6000.  From the topside, selling looks concentrated at the session high and sprinkled throughout at 0.6060 and 0.6080.