Another quiet, tight-ranged Asian session as the EU summit looms ever closer.
The start of the session saw the only data point of the day – New Zealand’s trade data for May. The numbers were bang in line with forecasts with the surplus narrowing slightly to NZ$301 mln from a revised NZ$335 mln the previous month, with a pickup in both exports and imports recorded. Increased imports led by crude oil and gasoline did the damage to the surplus, while on an annual basis the deficit was its widest in 2-1/2 years at NZ$805 mln in the 12 months to end-May. Despite this, the NZD held steady across the board along with other risk currencies.
If one was to search deeply for reasons behind the mild uptick in risk and risk currencies midway through the Asian session, headlines surrounding China’s comments that it will further develop offshore Yuan products in Hong Kong and make it easier for Hong Kong-based long-term funds to invest in mainland capital markets could be argued as the catalyst. However, note there were no additional details or timeframe available.
The EUR did not stray too far from the 1.25 mark versus the US dollar overnight, though the weight of EU/EUR news was predominantly bearish. Yesterday’s Spanish auction resulted in higher short-term yields and there were rumours of another Spanish downgrade to junk status. ECB’s Weidmann warned that a joint Eurobond, before greater fiscal integration, would be dangerous and likely contrary to the EU treaty while another member downplayed the effectiveness of any ECB rate cuts on solving the debt situation. Meanwhile, US rating agency Egan-Jones downgraded Germany’s debt to AA- from A+ with a negative outlook.
On the data front, US house prices, as measured by S&P/CaseShiller index, did not fall as much as expected in April, falling 1.9 percent y/y from -2.59 percent the previous month. US consumer confidence slid to 62.0 from a downwardly-revised 64.4 the previous month while the Richmond Fed manufacturing index dipped to -3 from +4.
Data Highlights
US Apr. S&P/CaseShiller House Prices out at -1.9% y/y vs. -2.5% expected and revised -2.59% prior
US Jun. Consumer Confidence out at 62.0 vs. 63.0 expected and revised 64.4 prior
US Jun. Richmond Fed Manufacturing Index out at -3 vs. +2 expected and +4 prior
NZ May Trade Balance out at +NZ$301 mln vs. +NZ$300 mln expected and revised +NZ$335 mln prior
Upcoming Economic Calendar Highlights
(All Times GMT)
GE Import Price Index (0600)
Norway Unemployment Rate (0800)
UK CBI Reported Sales (1000)
GE CPI (1200)
US Durable Goods Orders (1230)
CA Teranet/National Bank House Prices (1300)
US Pending Home Sales (1400)
Andrew Robinson,
SAXO BANK