• EUR/USD -1.1%
• NZD/USD -1.5%
• AUD/USD -1%

EUR/USD

Dollar Optimism Eclipses Euro Improvement: Euro data lent little to reverse the overall decline in the overnight as inflationary suggestions from the worldââ,¬â"¢s largest economy trumped better than expected data from the European region.  Suggestive of further export growth, German factory orders climbed on the month.  Although rising relatively in line with consensus figures for the month, the overall annualized number soared above expectations to the tune of 14.3 percent.  Indicative of growth, the figure bodes well for the Euro bull as the report is sure to lend a tightening consideration to central bankers.  In addition, Swiss unemployment improved to a 3.5 percent seasonally adjusted figure for the month of February.  Although not directly included in widely accepted Euro currency based fundamentals, the better than expected figure is reflective of an uptick in the region, expected to spill over into the rest of the area.  However, countering the positive data were continued inflationary suggestions according to the U.S. Labor Department.  Labor costs rose at the fastest pace in a year, a 3.3 percent clip, prompting concerns that inflation is creeping as employers continue to hire at loftier prices.  The concerns translated into speculation of further rate hikes, past the previous two that were priced in by futures traders, to a possible third by mid year.  With an increasing interest rate, closing in on 5 percent, traders bid the dollar higher as demand outpaced supply.

NZD/USD

Kiwi To The Downside: Kiwi sellers were heavy, pushing the currency pair through additional support on the New York session.  Continued bearish momentum looks imminent ahead of not only the Reserve Bank of Australia announcement but also the Reserve Bank of New Zealand announcement.  Expected to keep rates at the current 7.25 percent, the current economic corner that Governor Bollard has painted himself into is a dire one.  Sporting the highest rate of the industrialized countries, the economy is experiencing visibly slower growth as inflation concerns continue to loom.  Additionally, consumer spending has continued to the upside feeding price increases and boosting the import trade balance component.  This has raised an enormous amount of concern as traders look for viable rates of returns minus event risk, risk averse.  However, should accompanying statements be somewhat hawkish, as previously been speculated, the underlying should form a temporary bottom.  Subsequently, the question lies with whether or not policy makers are hawkish of inflation or watchful of slowing growth.

Rumorville: Continued selling looks imminent as bid orders remain thin on the current price action.  Offers hang heavy above current spot at 0.6515 and 0.6520 with potential bidding coming in around the 0.6450 and 0.6400 figures.

AUD/USD

Cashcard Comes Up Empty: Downside was witnessed in the Australian major as traders continue to speculate on a stay on interest rates at todayââ,¬â"¢s decision.  Helping the decision was yesterdayââ,¬â"¢s CashCard retail index.  Confirming that consumers may remain reluctant to spend that much more, the index , although rising in the month of February, dipped 0.7 percent on the annualized comparison.  Continuing the plateuing trend of flat consumer interest, expansionary suggestion seems limited in the economy as exports have dwindled recently.  According to the most recent trade deficit report, which widened considerably against consensus, global foreign consumers have pared back interest in exports leaving the current rate of imports higher.  This will likely lend to heavy consideration by Governor Ian McFarlane and fellow policy makers as the current condition seems contrary to one that was portrayed in an earlier speech to Parliament just a few weeks ago.  Inflationary pressures additionally seem lacking, further boosting the notion.  However, some bid interest looks to reenter on the Aussie side as the region still boasts a higher interest rate against the dollar, albeit momentarily.

Rumorville: Selling pressures are mounting at 0.7350 and 0.7355 levels as the underlying looks to be consolidating in the intermediate term.  Comparative bidding looks to be keeping the major underpinned heading into the Asian sessin at 0.7320/25 with stops tightly below at 0.7315.

Richard Lee is a Currency Strategist at FXCM.