FxBriefs Weekly Wrap Up

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WEEKLY WRAP UP: June 1, 2013 FxBriefs US wrap: Month-end less eventful than feared MAY. 31, 2013 20:07 GMT US personal income unchanged in April, spending falls 0.2% Core PCE deflator falls further to 0.7% from 1.0% Canadian GDP rises 2.3% in Q1; Q4 revised up to +0.9% from +0.6% EU’s Van Rompuy: The existential threat to the euro is over Chicago PMI spikes to 58.7 in May from 49.0 in April; strongest since March 2012 University of Michigan consumer sentiment index 84.5 (final) in May from 83.7 (preliminary) BOJ may offer 2-year liquidity to money markets US Medicare system solvency extended by two years; entitlements still unsustainable: Treasury Portuguese unions call for general strike against government austerity on June 27 S&P cuts Royal Bank of Scotland outlook to negative from stable S&P falls sharply in late US trade on index rebalancing, down 1.4% US 10-year note yields end up 2 bp at 2.14% after trading in wild 15 bp range A choppy, unpredictable month-end Friday. Talk of USD sales for month-end rebalancing proved overblown as the dollar rallied sharply once the 15:00 fixing was out of the way. USD/JPY jumped to 101.27 from 100.65 immediately before the fixing. EUR/USD reaction was more muted with a brief dip to US session lows of 1.2945 from 1.2970 ahead of the fix. Afternoon markets were quite until the last hour or so. US yields soared which prompted heavy liquidation of emerging market bond portfolios and currency exposures. Many have been short euros and long the likes of brazil, and those positions were covered in size in thin markets. EUR/USD ticked up to 1.3000 late in the day while USD/JPY ebbed to 100.40. From a macro perspective, Dovish ECB talk from the Bank of Italy’s Visco (ECB stands ready to intervene again) weighted on the euro while strong Chicago PMI and improved consumer confidence upped the odds of Fed tapering later in the year. FXBriefs European Wrap… all rather ‘risk off’ into the month-end following Visco’s comments MAY. 31, 2013 10:04 GMT ECB's Visco says ECB's ready to intervene again on rates, will consider all measures to maintain current credit conditions. MPC's Posen says BOJ is doing the right thing Saudi Oil Minister Ali al-Naimi says oil market is in excellent shape.. EU Commissioner Rehn- EU states must use their extensions to implement structural reforms ECB's Kranjec- Eurozone still in crisis and it'll take time to get out of it ITO sees room for yen to fall to 110.00 IMF's Lipton says 'Abenomics' could potentially lift the global economy Swiss May KOF leading indicator rises to 1.10 from 1.08 Eurozone April unemployment 12.2% from 12.1% UK April Mortgage approvals 53,710 German retail sales fall -0.4% m/m in April, but rise 1.8% y/y There was i thinking it’s all relatively calm… and it was for an hour or two. Nikkei closed up 1.37% and looked a bit more pacific with the EUR/USD hovering around 1.3040 and I even had delusions that a test of 1.3100 was on the cards.. No chance….., European stocks all started to fall on the open, which initially wasn’t wholly reflected elsewhere until ECB’s Visco started spouting about the central bank primed to intervene again if necessary on rates. . This set the ball rolling with EUR/USD breaking down through 1.3000 tripping some stops to lows of 1.2975. GBP/USD picked up a tad on improved mortgage data, despite lower lending to non-financial institutions  and let EUR/GBP take the brunt of the euro weakness with the cross slipping back to .8533 from early highs of 0.8578. Comments from MPC’s Posen that the BOE would not talk down the pound and that Carney’s tool box might not be as comprehensive as previously thought kept the GBP/USD steady. Cable  found support  in the high 1.5180′s having earlier touched session highs of 1.5232, later settling back around 1.5210. USD/JPY was caught up in EUR/JPY sales, despite agreeable comments from messrs Lipton from the IMF and a Tokyo Professor (ITO),(see above)  falling back to 100.30 but failing to trigger reported stops , having been as high as 101.05 in early Europe. Nikkei futures tanked following the official close hitting lows around 13417 in recent trade adding overall weight to the USD/JPY. AUD/USD also lost any shine slipping back under 0.9600 to 0.9566 after more selling from model funds who were sitting at the highs in Asia earlier. European range 0.9566-0.9660 Fxbriefs Asian wrap: Consolidation the theme for a weary Asian market MAY. 31, 2013 05:20 GMT New Zealand Terms of Trade Index rose 4.1% beating forecasts of 1.5% New Zealand: ANZ Business confidence rose 41.8 from 32.3 IMF: 2 % inflation is possible / fully endorses BoJ’s policy framework IMF: Recent JPY depreciation is not problematic Japan Markit Manufacturing PMI 51.5, up from 51.1 last month Japan Unemployment 4.1%, as expected Japan Household spending down to 1.5% from 3% Japan core CPI -0.4% Japan Industrial Production rose to 1.7% against  forecasts of 0.6% Aso: Sales tax rise is a step towards restoring fiscal health Australian Private Sector Credit unchanged at 0.3 USD/JPY opened at 100.75 and drifted towards 101.00 ahead of the Nikkei opening. As the index opened on a positive footing and extended gains, we pushed towards 101.28. The Nikkei stalled at just over 2% and headed lower, and not surprisingly, USD/JPY followed. Most of the action took place around 101.00, almost mirroring exactly the moves on the equity market. AUD/USD opened at 9665 and pushed towards 9685 on local corporate demand. Macro accounts added supply and the pair eased back towards 9660. As the Nikkei started to give some gains back, the AUD was pressured lower, conditions were said to be extremely thin. We found a base around 9630, local exporters the predominant buyers. EUR/USD ranged 1.3035 to 1.3060 with not significant flows. Chinese official PMI is due out on Saturday at 01:00 Market survey 50.0, prior 50.6 This data is likely to dictate the early moves on Monday when Asia opens for business. Have a great weekend Peter Was this email forwarded to you? Sign up to start receiving your own copy and download a free report. FxBriefs Home | Browse Topics | Free Reports | Economic Calendar | About | Unsubscribe HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors. 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