FX Daily Planet: New York Open

Fx Daily Planet: New York Open

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It has been a good day for EUR which is higher across the board and versus USD and JPY in particular. JPY has not been helped following the BoJ rate decision where the Board pledged to help banks lend amid a further sign that the country is no nearer exiting from unconventional policy measures. Developments in Greece remain the key market focus, though there has been little in the way of new information today. Hopes remain that this weekend meeting of EU Finance minister will deliver meaningful detail on an aid package for Greece. Spreads have consequently tightening during the session whilst European banks are putting in a strong performance. Data releases in Europe have been sparse with only Norwegian credit and labour market numbers of note. Though recent Euro area data releases have been on the stronger side of expectations relative to those in the US, this is unlikely to be a meaningful positive for EUR until the near-term sovereign crisis has abated. The US trading session sees the release of some key data such as the advanced reading of Q1 GDP. We look for a slightly sub consensus reading of 3% saar. Chicago PMI is also due for release where consensus looks for another increase in confidence.

Overnight news

NOK: Unemployment rate falls in line with expectations to 3%. Credit indicator growth is weaker than expected at 3.9%.

CHF: KoF Swiss leading indicator is in line with expectations rising to 1.99

JPY: April PMI advanced to 53.5 vs previous 52.4; March household spending at 4.4%m/m vs 0.7% consensus; March unemployment rate at 5.0% vs 4.9% cons and job-to-applicant ratio 0.49 vs 0.48 cons; April Tokyo CPIs, both headine and core, stronger than consensus (headline -1.5% vs cons. -2.1%, core -1.9% vs cons -2.1%) while nation-wide figures for March were in line with consensus. March IP weaker at +0.3% vs +0.8% cons with production forecasts at +3.7% m/m for April and -0.3% for May.

JPY: Japanese investors turned net sellers of foreign bonds, net selling ¥100.6bn, after three consecutive weeks of large scaled net buying, while also net selling Japanese stocks by ¥34.9bn.

JPY: Finance Minister Kan said “(subsidy on high school tuition) should have impact of pushing down over-year-ago CPI by roughly 0.5% point for the next 12 months”

JPY: The BoJ left monetary policy unchanged by a unanimous vote as broadly expected but the statement unexpectedly revealed that the governor Shirakawa has instructed staff to examine and report on another occasion on possible ways to support private financial institutions in terms of fund provisioning.

AUD: March private sector credit growth slightly higher at 0.5%m/m vs 0.4% consensus.

GBP: April Gfk consumer survey -16 vs -15 consensus.

UK election: Three instant-reaction polls showed Conservative leader Cameron won the final debate of the U.K. election campaign; YoGov Plc poll showed 41%, Comres Ltd. 35% and ICM Ltd. 35% of the viewers favouring Cameron.

Today’s watchlist (all times BST; +9hrs for Sydney, +8hrs for Tokyo, -5hrs for New York)

CHF: Apr KOF leading indicator (index, sa) @9:30 (JPM: 2.00, Cons: 1.99)

USD: 1Q10 GDP advance (%q/q, saar) @13:30 (JPM: 3.0, Cons: 3.3); 1Q10 GDP personal consumption advance (%q/q, saar) @13:30 (JPM: 3.1, Cons: 3.1); 1Q10 GDP price index advance (%q/q, saar) @13:30 (JPM: 0.5, Cons: 0.9); 1Q10 GDP PCE core advance (%q/q, saar) @13:30 (JPM: 0.6, Cons; 0.4); 1Q10 employment cost index (%q/q, sa) @13:30 (JPM: 0.4, Cons: 0.5); Apr Chicago PMI (index) @14:45 (Cons: 60.0); Apr U. Michigan cons. conf. final (index) @14:55 (JPM: 71.0, Cons: 71.0)

CAD: Mar Industrial PPI (%m/m) @13:30 (JPM: -0.5); Feb monthly GDP (%m/m, sa) @13:30 (JPM: 0.2, Cons: 0.4)

Overnight price action

FX: EUR trades stronger across the board as hopes build for meaningful detail on Greek aid package.

FX vol: Front-end vol is lower across the board particularly for JPY crosses.

Commodities: Gold and oil are both higher.

Bonds: JGB European bond futures are broadly flat.

Equities: European equities are broadly higher.

Technical View for the day

Within 48 hours the turmoil around the downgrading of Greece, Portugal and Spain dissolved and markets returned to their risk-positive trading behavior as if nothing had happened. The European markets which are naturally underperforming under given circumstances are lagging behind but are being dragged by the US markets which are still in good shape with key-support in the S&P500 at 1169 untouched so far. That said the resumption of the prevailing trends looks like a done deal but is still facing the residual risk that the 76.4 % retracement of the latest down-consolidation (i.e. 1211 in the S&P500) are not taken out. A failure to do so could deliver fresh support for the idea that markets have switched to the consolidation mode what would put renewed pressure on CE3.- and potentially also on commodities currencies which traded rock-stable during the latest risk sell-off. As for EUR/USD chances of performing a stronger bounce towards 1.3674 have surely improved after having basically reached a projected target cluster at 1.3093/81 but as long as first resistance at 1.3330 is not taken out, uncertainty still rules and 1.3081 remains at risk. Below the latter the EUR bears would have taken over full control again looking for a straight extension to 1.2888/1.2799 and potentially 1.2671.

Research from the region you may have missed

European Banks : Greek Sovereign Risk - Potential implications for European Banks

Details of Greek support package likely in coming days

ENDS

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