European PMI improvement helps momentum
What happened overnight
– Euro mfg PMI revised higher; Spain, Italy PMIs higher
– Sweden, Swiss, EMEA PMIs improve, UK PMI ticks lower
– China’s official PMI weaker but change in sample size may be a factor
– RBNZ chief discusses post-earthquake growth in speech
A strong set of PMI reports in Europe has boosted the EUR, SEK and the CE3 currencies. EURUSD has pushed up to new highs for the year of 1.3675, its best levels since November 2011. EURGBP has extended its rally to 0.8648 highs as UK PMI disappointed, while, in contrast, EURSEK has fallen back through its 200-day moving average to 8.5979 while EURCHF is also breaking down again. Meanwhile, in Asia, a disappointing China PMI headline and new highs in USDJPY have hurt non-Japan Asia currencies, and AUDUSD has slipped to new lows for the year of 1.036, with the NZD again outperforming thanks to constructive comments from the RBNZ chief. Equity markets were mixed in Asia, but are generally firmer in Europe, with the notable exception of Spain which has sold off 1.3%. In contrast , Spanish bonds are stable, with the 10-year yield down a few basis points. Euribor futures have also managed a small rally after a small 3-year LTRO repayment announcement.
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Credit Suisse