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EUR: The ZEW data at 09:00 GMT the main data risk for the single currency. Focus will be on German data after the fall seen in last month’s release (sentiment back below 40 level), with market expecting a bounce back up to this level.   Steady (last was 36.3) or lower would knock the euro.   EU finance minister meet today, so just worth keeping an eye out for stray comments. Banking union is back on the agenda.

AUD: Australia budget presentation at 09:30 GMT (see below).

Idea of the Day

The Australian budget is presented later this morning and as we wrote about yesterday (“Crunch time for the Aussie?”), the fiscal situation is one of the reasons that the shine has come off the Aussie recently.   Central banks have doubled their reserve holdings of “other currencies” (in which the Aussie is included) in recent years, partly based on the relatively better fiscal backdrop that the Aussie offers compared with the dollar, euro and yen.   The government were forecasting a budget surplus for the current year, but falling tax revenues (in part from the mining sector) have undermined that ambition.   Compared to most of the Eurozone, things in Australia are still looking strong on the budget side.   But today is about adjusting to a new reality, especially with as growth in China moderates and the balance shifts more towards services. The upside is looking that bit tougher for the Aussie from here.

Update: Aussie falls on budget release – government forecasts big deficit.

Latest FX News

JPY:  Some consolidation being seen after the push above the 100 level.   EURJPY is also consolidating just below the 132 area.

AUD:  Focus on the budget. Tighter budget is anticipated in the wake of lower taxes as the commodity boom tails off.   Previously, Australia was forecasting a budget surplus for this year, something which is now looking out of sight. AUD still fighting with parity level vs. the USD.

GBP:   Stops were triggered into the European close yesterday, pushing cable through the 1.53 level, back to levels last seen in the wake of the stronger than expected GDP nearly 3 weeks ago. Modest recovery seen overnight.   Inflation report from Bank of England released tomorrow.

EUR: An underlying resilience still evident on the single currency, with the weakness seen in the wake of the stronger US retail sales data soon being clawed back.   The firmer tone has also been evident during the Asia session, although once again EUR is fighting the 1.30 level.