The Majors have managed to recover marginally against the buck ahead of the US open, after getting hit hard in Tuesday trade. Comments from Fed Bullard, who downplays the latest discount rate hike and suggests that the Fed may hold off moving on its key policy rate until 2011, have helped to inspire some USD profit taking. The Majors have managed to recover marginally against the buck ahead of the US open, after getting hit hard in Tuesday trade. Comments from Fed Bullard, who downplays the latest discount rate hike and suggests that the Fed may hold off moving on its key policy rate until 2011, have helped to inspire some USD profit taking. However, the commodity currencies have not responded in the same way, and remain under pressure with Aussie, Kiwi and Cad all extending declines against the Greenback, exacerbated by a sell-off in gold and oil prices. Despite some gains on the day, there was some nervous Euro tension after sources said the ECB would extend unlimited cash steps into Q3. Meanwhile ECB Gonzalez Paramo contributed to offers in the Euro after saying that the single currency has fallen in the direction of its historical moving average, which is a development that is not unjustified. ECB Bini-Smaghi was also out saying that it would be a diabolical error if central banks went down the route of raising their inflation targets. Data in the Eurozone was mostly as expected, with German GDP and GfK highlighting the releases. A better than expected Eurozone industrial orders failed to materially factor into price action. Greece was back in the headlines and weighed on sentiment after talk circulated that funds were being withdrawn from local banks. Elsewhere, no data of the UK, but BOE Posen shook things up a bit after echoing King’s line yesterday that the door could be left open for more QE if necessary. In Japan, the trade surplus came out better than expected, while corporate services prices remained sluggish. BoJ Yamaguchi said that the central bank would do its utmost to pull Japan out of deflation. Australian data was mixed, with wage growth coming in on the weaker side, and construction showing firmer. The latest Chinese news that CBRC has told lenders to restrict new lending, has also weighed on sentiment overnight, but traders seem to be taking the news with a grain of salt given the central bank’s commitment to maintain an overall accommodative policy. Finally, Kiwi setbacks have been mitigated somewhat on the back of some positive news out from the country’s largest company, whose profit forecasts were lifted. Looking ahead, the clear focus in the North American session will be on the testimonies of Fed Chair Bernanke and Treasury Secretary Geithner at 15:00GMT. On the data front, new home sales (355k expected) are due at 15:00GMT. US equity futures point to a marginally lower open, while commodities are well offered with gold leading the decline.

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