Currency markets were still in limbo mode during the Asian session ahead of today’s EU summit.
We had a few more data points to focus on today. From Japan we learned that retail sales increased by 0.7 percent from a month ago, a stronger performance than the 0.2 percent seen in April, but on an annual basis the growth in sales slowed to +3.6 percent y/y, down from 5.7 percent the previous month. The same picture was evident among large retailers who saw sales falling 0.9 percent from a year earlier (the second negative number in a row). Subsidies for eco-friendly cars are supporting sales in the short-term but the longer-term impact is waning as the global uncertainty surrounding growth increases.
The recent RBA cuts are so far having limited impact on the Australian housing market, as evidenced by the latest new home sales data from the Australian Housing Industry Association. New home sales rose a meager 0.7 percent in May from a month earlier after a strong 6.9% rebound in April.
There was nothing much to report from the overnight session as currencies traded in tight ranges, similar to what was seen during the Asian session. EURUSD tested below early support at 1.2470 (no real news driving it but Germany still maintaining its hard line against common liability sharing before greater fiscal union) but failed to break the more significant 1.2440 level. EU’s Juncker was out already downplaying market expectations from the imminent 2-day EU summit. GBP did not benefit much from a very strong CBI reported sales number (June, possibly linked to the Diamond Jubilee celebrations?) and hence the bears had a test of the downside.
On the data front, Spain/Italy’s retail sales numbers were weak while on the US front durable goods orders and pending home sales were above forecast. Durable goods orders rose 1.1 percent versus 0.8 percent the previous month while ex-transportation numbers rose 0.4 percent from -0.6 percent last time. Wall St was encouraged by the data and posted its second up-day in a row. DJIA closed up 0.74 percent, S&P 0.9 percent and the Nasdaq 0.74 percent.
Data Highlights
US May Durable Goods Orders out at +1.1% m/m vs. 0.5% expected and revised -0.2% prior
US May Durable Goods Ex-transportation out at +0.4% m/m vs. 0.7% expected and -0.6% prior
CA May Teranet/National Bank House Price Index out at +1.1% m/m, +5.8% y/y vs. 0.8%/5.9% prior resp.
US May Pending Home Sales out at +5.9% m/m, +15.3% y/y vs. 1.5%/9.9% expected and -5.5%/+14.7% prior resp.
JP May Retail Trade out at +0.7% m/m, +3.6% y/y vs. 0.2%/2.9% expected and -0.4%/5.7% prior resp.
JP may Lge Retailers’ Sales out at -0.9% y/y vs. -1.0% expected and revised -0.6% prior
AU May HIA New Home Sales out at +0.7% m/m vs. 6.9% prior
NZ Jun. NBNZ Activity Outlook out at 20.8 vs. 34.9 prior
NZ Jun. NBNZ Business Confidence out at 12.6 vs. 27.1 prior
AU May Job Vacancies -5.3% q/q vs. 0.7% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
UK Nationwide House Prices (0600)
Sweden Retail Sales (0730)
Sweden Trade Balance (0730)
GE Unemployment Rate (0755)
Norway Unemployment Rate (0800)
UK Final Q1 GDP (0830)
UK Current Account Balance (0830)
EU Euro-zone Confidence Indicators (0900)
US Q1 GDP Revision (1230)
US Initial Jobless Claims (1230)
US Bloomberg Consumer Comfort Index (1345)
US Kansas City Fed Index (1500)
US Fed’s Pianalto to speak (1530)
UK BOE’s Weale to speak (1700)
Andrew Robinson,
SAXO BANK