Markets Higher on Lack of Negative Headlines; NZD Breaks Short Term Range

The Euro was higher during the Asian session on the lack of negative debt headlines and markets are now focused on the EFSF vote from the German Parliament. The oppositional minority has publicly reversed its position for the most part, so most analysts are expecting the vote to pass with a clear majority.

If this does actually occur, it will be seen as a large positive as it would suggest that we will start to see some cohesion in the Eurozone in terms of how to deal with the current debt problems and raise the possibility that we will see similar outcomes in other areas. The vote will begin at 9:00 GMT, with the results posted at 11:00 GMT.

In the US, the Federal Reserve Chairman (Bernanke) made comments yesterday saying that the current level of unemployment has become a “national crisis” and added that monetary policy cannot be viewed as the only solution. Other comments expressed concern for the housing market, saying that legislative measures should be taken to prevent further weakness.

During the European session, Spain and Italy kept in place its ban on short-selling financial stocks and gave no indication for when exactly this will be removed. Macro data was seen with the US durable goods report, which showed some improvement on expectations, falling by only 0.1% for the monthly figure.

GDP data is scheduled for Thursday with market expectations calling for a rise of 1.2% on a yearly basis. In Nordic data, Sweden and Norway will also release their retail sales data and markets will be watchful to see if the global slowdown has extended to this region as well. The EUR/USD is trading flat at 1.3520-1.3610 while the USD/JPY sees even less volatility at 76.50-76.65.

In Japan, retail sales data came out overnight and missed expectations, coming in -1.7% for August (expectations called for a rise of 0.2% for the monthly figures). In New Zealand, the Finance Minister (English) made comments, saying that their national growth forecasts will see some downward revisions in the long term (multiple year forecasts). Central bank members have made recent comments saying that interest rate levels are appropriate but that European defaults could have a negative effect on materials exports, which could change the bias later.