The EUR traded with a softer feel to it for most of the Asian session after Moody’s announced 1-3 notch ratings cuts for 16 Spanish banks as it noted the Spanish government’s ability to support some banks had weakened. Asian markets traded lower to match the New York session’s low at 1.2665 and consolidated thereafter.
House prices in China declined for the seventh straight month in April, according to latest data from the National Bureau of Statistics as anti-speculative measures initiated in early-2010 continue to deflate the threatening property bubble. From a month ago, new house prices fell in 43 of the 70 cities monitored with a mere 3 cities registering price gains. The rest saw prices holding steady. Coming on the back of softer economic data and an increasing likelihood of slower growth we may expect heightened talk of further easing, though the authorities have given no hint of relaxing the anti-speculative housing measures.
We saw some activity in Australian bill markets on a slow data day. Bill futures were very well bid on reported short-covering (though one wonders why short positions are held in the current easing climate?) and Ozzie yields dipped as a result. This put early pressure on the AUD (a very soft ASX not helping either) and we slid to fresh 2012 lows.
USDJPY was the major mover overnight as weak US data rekindled thoughts of QE3 from the Fed, pressuring US yields lower and hurting the US dollar. The JPY’s safe-haven status also helped a big-figure move in the space of 2 hours. The down-move was only partially retraced at this morning’s fix even with strong right-hand-side demand reported.
US data releases were generally soft with the weekly Bloomberg consumer comfort index sliding to -43.6, a level last seen in January, and marked the fourth straight week of declines. In addition, the Philadelphia Fed survey lurched into negative territory for the first time since September last year reflecting a fall in orders and employment sub-indices. The Conference Board’s index of leading indicators also surprisingly fell in April with 4 of the 10 indicators retreating and one unchanged.
Have a great (G8) weekend.
Data Highlights
CA Mar. Wholesale Sales out at +0.4% m/m vs. 0.3% expected and revised 1.5% prior
US Initial Jobless Claims out at 370k vs. 365k expected and revised 370k prior
US Continuing Claims out at 3265k vs. 3225k expected and 3247k prior
US Bloomberg Consumer Comfort Index out at -43.6 vs. -38.0 expected and -40.4 prior
US May. Bloomberg Economic Expectations Index out at -1 vs. -3 prior
US May Philadelphia Fed Index out at -5.8 vs. +10.0 expected and +8.5 prior
US Apr. Leading Indicators out at -0.1% vs. +0.1% expected and +0.3% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
JP Store Sales (0530)
GE Producer Prices (0600)
EU ECB’s Gonzalez-Paramo to speak (0900)
CA CPI (1230)
Andrew Robinson,
SAXO BANK