The EUR started the Asian session at the NY lows – and stayed there. There was not too much activity to report but risk and the associated currencies traded with a heavy bias with the USD index extending yesterday’s up-move with gains of 0.1 percent.
Data releases had little impact with Australian consumer confidence staging a small rebound in May following the RBA’s aggressive 50bp rate cut at the start of the month. The outlook for family finances over the next 12 months slid 1.5 percent while the outlook for economic conditions over the next 12 months rose 1.3 percent. Overall, confidence rose 0.8 percent m/m as the index rose to 95.3 from 94.5 but developments outside of Australia are likely to keep the local consumer cautious. Wage costs rose slightly more than analysts’ estimates in the first quarter as the biggest resources boom in decades introduced pressures in that sector. Hourly pay, excluding bonuses, rose 0.9 percent q/q and 3.6 percent y/y, slightly higher than consensus 0.8 percent/3.5 percent estimates.
From Japan we saw that machinery orders fell by a smaller than expected 2.8 percent m/m as business investment following last year’s earthquake continues. The service sector failed to register any positive growth for the third straight month with the tertiary industry index falling 0.6 percent m/m, more than the market’s expectation of -0.4 percent.
Better than expected Q1 GDP numbers from both Germany and the Eurozone gave the EUR only temporary respite from steady selling as it emerged that the Greek coalition impasse will likely mean fresh polls mid-June. Additional pressure came from reports Greek banks had seen €700 mln in deposit flight on Monday.
US data was mixed overnight with no surprises from CPI data for April, but a strong rebound in both the Empire Manufacturing and NAHB housing market indices. In contrast retail sales were softer than March but in line with forecasts at +0.1 percent m/m. The Empire Manufacturing index surged to 17.1 from 6.6 in April, the seventh month in a row it has been above zero, with a strong increase in shipments and new orders noted while the employment index also rose to 20.5 from 19.3. Meanwhile the NAHB housing market index rose to its highest level in 5 years at 29 from 24 previously.
Data Highlights
US Apr. CPI out at flat m/m, +2.3% y/y, both as expected vs. 0.3%/2.7% prior resp.
US May Empire Manufacturing out at 17.09 vs. 9.0 expected and 6.56 prior
US Apr. Advance Retail Sales out at +0.1% m/m, as expected vs. revised 0.7% prior
US Mar. Net Long-term TIC Flows out at +$36.2 bln vs. $32.5 bln expected and $10.1 bln prior
US Mar. Business Inventories out at +0.3% m/m vs. +0.4% expected and +0.6% prior
US May NAHB Housing Market Index out at 29 vs. 26 expected and revised 24 prior
JP Mar. Machine Orders out at -2.8% m/m, -1.1% y/y vs. -3.5%/+4.4% expected and 2.8%/8.9% prior resp.
JP Mar. Tertiary Industry Index out at -0.6% m/m vs. -0.4% expected and flat prior
AU May Westpac Consumer Confidence out at +0.8% m/m vs. -1.6% prior
AU Q1 Wage Cost Index out at +0.9% q/q, +3.6% y/y vs. 0.8%/3.5% expected and 1.0%/3.6% prior resp.
Upcoming Economic Calendar Highlights
(All Times GMT)
UK Claimant Count Rate (0830)
UK Avg. Weekly Earnings (0830)
UK ILO Unemployment Rate (0830)
EU Euro-zone CPI (0900)
Swiss ZEW Survey (0900)
EU Euro-zone Trade Data (0900)
UK BOE Quarterly Inflation Report (0930)
US MBA Mortgage Applications (1100)
EU ECB Rate Announcement (1230)
CA Manufacturing Sales (1230)
US Housing Starts (1230)
US Building Permits (1230)
EU ECB Press Conference (1300)
US Industrial Production (1315)
US Capacity Utilization (1315)
US Fed’s Bullard to speak (1630)
US FOMC Minutes (1800)
Andrew Robinson,
SAXO BANK