Bell FX Currency Outlook: Despite the tension currently existent in currency markets, exchange rates failed to move much overnight.
Australia: First things first, the spill in the ALP leadership in yesterday's session appeared to weigh little on the AUD. The status quo remains, including the scheduled election date of 14 September for the House of Representatives and half of the Senate.
Currency markets digested Russian Prime Minister Medvedev's comments that Russia may look to divest itself of its foreign exchange reserves held in EUR.
The Parliament rises today and will not sit again until budget day on 14 May. There was no impact on Australian markets from this event.
This theme received additional justification following the release of Euro Zone PMIs for March, which indicated the broader economy is yet to exit from its current contraction.
This played to the hands of what appear to be safe haven currencies which include the AUD and NZD.
Headline watching on Cyprus continued with speculation around a "plan B" solution and what may happen to the Cypriot banks overshadowing better-than-expected US data.
The Eurogroup is currently meeting via teleconference to "take stock" of the situation in Cyprus. The ECB has given Cyprus until Monday to raise the EUR 5.8bn required for the EU bailout package before it withdraws liquidity support.
As a result, equities declined overnight, while core European bonds and US Treasuries rallied.
Commodities were mixed, with oil easing, while gold and bulk commodities improved slightly.
In Australia today, Malcolm Edey, Assistant Governor (Financial System) will be a panel discussant at the Australian Centre for Financial Studies at 12:45AEST.
Majors. Yesterday in China, the preliminary PMI rose much higher than expected to 51.7 from 50.4 last month. The new orders and new export orders subcomponents improved suggesting that manufacturing growth will be supported in the near term, while output and input prices fell sharply.
US data flow was mildly better than expected, although it had little impact on the market with new orders and employment both improving.
Encouragingly, the outlook series also recorded a modest rise. Elsewhere, the JPY was somewhat firmer following a press conference from incoming Bank of Japan governor Kuroda.
Today in Asia there is little data or relevant market events to drive prices. Barring any unforeseen developments in Cyprus, we expect exchange rates will consolidate into tonight's NY close.
22 MAR CH MNI Flash Business Sentiment Indicator
AU RBA's Edey speaks on finance panel in Melb
GE IFO -Bus Climate/Current assessment/Expectations
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