FXS:New Zealand Dollar Rallies as Agricultural Commodity Prices Jump
US Dollar to take Cues from Jobless Claims, Housing Data following FOMC
Euro Risks to Downside Against Swiss Franc on Continued Greek Debt Troubles
British Pound Tumbles Against US Dollar as Bank of England Rate Prospects Sink
Japanese Yen Could See Major moves on Gross Domestic Product Data
Canadian Dollar Rallies as Crude Oil Inventories Report Sparks Oil Strength
New Zealand Dollar Rallies as Agricultural Commodity Prices Jump
US Dollar to take Cues from Jobless Claims, Housing Data following FOMC
Minutes from the latest FOMC meeting in April showed consensus among central bankers with regards to letting the Fed’s massive balance sheet slowly dwindle as the first part of paring back the extraordinary measures implemented at the height of the crisis. Much of the minutes reflected Fed Chairman Ben Bernanke’s remarks at the post decision press conference, highlighting increased concerns among members with regards to the “upside risk to the inflation outlook,” and the downside risk to growth. The greenback was marginally higher at the close of North American trade, having pared overnight losses earlier in the session. Looking ahead the dollar may be losing some steam as commodities and overall risk appetite pick up. Traders will be eying weekly jobless claims and existing home sales data tomorrow after new home sales figures earlier in the week grossly missed estimates to the downside. It’s worth noting that the Dow Jones FXCM Dollar Index remains in the ascending channel that has held since late April, with support seen 9610 and 9550.
Euro Risks to Downside Against Swiss Franc on Continued Greek Debt Troubles
The Euro finished roughly unchanged on another choppy day of trading, showing relatively little sensitivity on continued speculation over a Greek debt restructuring. European Central Bank officials once again stated that a Greek debt restructuring was effectively off the table, only available as a last resort in the most dire of circumstances. Of course, continued talk of “voluntary reprofiling” is a seemingly-innocuous euphemism for a Greek debt default, and 2-year government bonds continue to yield an almost-unbelievable 25 percent. The euro continues to underperform against the high-flying Swiss Franc as traders opt for the stability of the non-euro zone economy. Continued uncertainty favors EURCHF weakness, while the EURUSD will almost certainly take its cues from broader market sentiment as cross-asset correlations trade near record-highs.
British Pound Tumbles Against US Dollar as Bank of England Rate Prospects Sink
The sterling was the worst performer against the greenback at the close of New York trade after a slightly dovish BoE minutes release and a weaker than expected employment report saw rate -hike expectations diminish. The UK economy saw an uptick of 12.4k jobless claims in April, up from an upwardly revised previous print of 6.4K. And although the ILO unemployment rate fell to 7.7% from 7.8%, the claimant count rate increased by 0.1% to 4.6%. Coupled with last week’s stronger than expected inflation report and poor industrial and manufacturing production figures, the data continues to suggest sluggish growth in the Isle-nations as inflationary pressures persist. The sterling plummeted on the release, with the pound closing out the session lower by 0.55%, albeit well off session lows. Overnight traders will be eyeing April consumer confidence and retail sales data, with confidence expected to rise to 46, up from 44 a month earlier. Retail sales figures are also expected to improve with the month on month print seen rising to 0.8%, up from 0.2% m/m
Japanese Yen Could See Major moves on Gross Domestic Product Data
The Japanese Yen traded slightly lower on strong rallies in ‘risk’, but the true fireworks may wait for upcoming Gross Domestic Product figures due at 23:50 GMT. Analyst forecasts for Q1 Japanese GDP are unusually wide, ranging from a -4.3 to -0.4 percent annualized changes according to Bloomberg news. Natural disasters in March explain the wide range, and we suspect any especially large surprises could spark moves in the risk-sensitive currency. Said results could likewise shape expectations for the upcoming Bank of Japan monetary policy decision due Thursday night/Friday morning. Central bankers will almost certainly leave rates unchanged, but it will be important to watch whether the BoJ hints at expanding monetary policy accommodation amidst flagging growth.
Canadian Dollar Rallies as Crude Oil Inventories Report Sparks Oil Strength
The Canadian dollar advanced for the second consecutive day against the greenback on the back of stronger than expected April leading indicators and a rebound in commodities. The Loonie was 0.13% higher against the dollar as crude oil surged nearly 3% on its approach back to the $100 mark. Even risk for the USD/CAD pair mounts on Friday when the Bank of Canada releases April CPI figures and retail sales data. Notwithstanding sudden shocks to commodity prices, the pair should remain supported above the 50% Fibonacci retracement taken from the May 11th advance at 0.9650.
New Zealand Dollar Rallies as Agricultural Commodity Prices Jump
The New Zealand Dollar was the top-performing G10 currency on a strong day for financial markets, boosted by impressive gains in agricultural commodities and broader risk sentiment. An effectively empty economic calendar meant that the relatively high-yielding currency traded almost tick-for-tick with the S&P 500, and similarly limited event risk in days ahead point to similar moves.
