Sideways forex trading continue as markets wait out U.S. GDP data

- Reserve Bank of New Zealand raises rates by 25bps: Markets seem convinced that this will be the end of a sequence of rate hikes from the RBNZ, as governor Bollard refrained from commenting on the potential for further rate hikes. The RBNZ said that "recent indicators confirm that the resurgence in economic activity that began in late 2006 has continued over recent months, with domestic demand continuing to expand strongly." Gains in the NZD were limited by the RBNZ saying that the high value of the NZD is "unjustified on the basis of medium-term fundamentals".

- Equities: Asian stocks traded higher, buoyed by the Dow rising above 13,000. The Nikkei225 is higher by more than 0.70% as exporters rebounded from yesterday. Shares of Sony and Canon led the gainers on the Nikkei. The ASX 200 is higher by more than 0.30% and holding above 6,200. Metal stocks were the big winners on the ASX. The Kospi index is higher by more than 0.75% and is trading near a new record high. Korean equities were well supported by comments from the Finance Ministry, saying that the strong economic growth momentum is expected to accelerate. Gains on the Kospi are being led by Samsung and Posco Steel. Chinese Equities are higher by more than 0.80%, with gains being led by Shenzhen Development Bank. The Hang Seng is currently higher by more than 0.60%, tracking gains in Chinese equities.

- Forex: The USD remained weak during the Asian session, with the USD index hitting an all-time low. While today's U.S. data wasn't negative, it certainly wasn't positive either and the market was left to trade in tight ranges. Traders now wait out Friday's U.S. GDP data that should determine whether the USD downtrend will continue. Although the EUR/USD hit a fresh all time high today, several analysts point out that the EUR/USD's price action has been unimpressive. The consensus seems to be that we will be seeing more sideways movement in the major currency pairs ahead of Friday's U.S. GDP data.

- Commodities: Crude oil is little changed and just below the $66 level as US weekly gasoline inventories were much less than expected (Gasoline: -2.8M v -500Ke). Spot gold is currently higher by more than 0.15%, tracking gains in the EUR/USD pair. Shanghai Copper is higher on a fall in global stockpiles.