The appetite for risk is divergent in FX ahead of the US open after the long weekends in the US and the UK. The euro surged to a three-week high on hopes that Greece will be bailed out and on hawkish comment from the ECB's Draghi that the central bank’s policy remains accommodative and sovereign risk will not deteriorate ECB’s price stability). Of course, one must also remember that China will help the Eurozone, as the collapse of the union would be a disaster for the Chinese currency reserves and its exports. In the same vein, at the G8 meeting in Deauville, France, President Obama said he wanted to see a strong euro. Conversely, the yen tanked after Moody's Investors Service placed the Japanese government bond ratings on review for a possible downgrade because of the weak policy response to the faltering economic outlook. The pound and franc open off their best levels, the Canadian dollar is strong and the Australian dollar reversed early gains.
The short-term outlook for most of the European and the commodity currencies is sideways to slightly bullish. The medium-term outlook is sideways for most of the major currencies. The LGR model is long all the major currencies except for the Canadian dollar.
The Asia/Pacific stock indexes closed up, the European bourses are trading higher and the US stock indexes are up in pre-open markets. Meanwhile, oil, gold and silver are up as well.
Overnight:
Australia: Building approvals Building approvals fell 1.3% in April after a revised 8.6% rise in the previous month.
Australia: General government final consumption expenditure increased 1.4% quarter-on-quarter in seasonally adjusted terms in the first quarter.
Australia: Private sector credit recorded no growth in April after a 0.6% rise in March.
Japan: Moody's Investors Service placed the Japanese government bond ratings on review for a possible downgrade on concerns about weak policy response to the faltering economic outlook.
Japan: The unemployment rate rose 4.7% in April from 4.6% in March.
Japan: Household spending was down 3.0% on year in April following the 8.5% plunge in March.
Japan: Industrial production rose 1.0% in April following the 15.5% plunge in March.
Eurozone: Unemployment rate remains unchanged at 9.9% in April.
Germany: The unemployment rate fell to 7.0% in May from 7.1% in April.
Germany: Retail sales rose 0.6% month-on-month in real terms in April following a revised 2.7% decline in the previous month (initially -2.1%).
Germany: New orders for plant and machinery rose 22% in April year-on-year, following an 18% gain in the previous month.
Eurozone: Annual inflation eased to 2.7% from 2.8% in April.
France: Producer prices grew 0.8% in April, slightly slower than the previous month's 0.9% increase. The PPI rose 6.4% year-on-year, after increasing 6.6% in the previous month.
Italy: Producer prices rose 0.6% in April, after rising an upwardly revised 0.8% in the previous month. The PPI increased 5.2 year-on-year in April, slower than March's 5.8% rise.
France: Consumer spending decreased by 1.8% in April following a revised 1% decline in March.
Switzerland: The GDP expanded 0.3% in the first quarter, slower than the revised 0.8% growth seen in the fourth quarter.
