Forex News

PM Papandreou will meet with opposition party leaders today in an bid to to achieve some form of consensus on the measures that need to be adopted. President Karolos Papoulias is also reported to be attending today’s meeting. According to Ekathimerini, this type of meeting, involving all the party leaders and chaired by the president, […]

News BG: Neutral – Deleveraging of the economy continues throughout March (p2) RO: Neutral – Govt auctions RON 0.5bn 2021 ROMGB: yield – 7.45%; bid/cover ratio – 2.78 (p2)

Comment: USD/CHF has eroded the .8554 recent low and is in all time lows. This targets the base of a 7 year channel at .8370.

G10 Currencies USD: The fact that the US GDP data for Q1 2011 was not revised upwards, contrary to expectations, and that the initial jobless claims are rising notably again, was not good news for the dollar.

Helped by intensifying fears that the IMF may not release the next aid tranche for Greece and disappointing US macro data, 10y Bunds have reached our envisaged near-term target at 3% in yield.

The Asian session started off with mild soft USD tone, USDJPY traded below NY low 81.15 and some stops taken out followed the better than expected release of Japan Apr CPI (positive number for first time in 2 years) and retail sales.

EURUSD correction continues to dominate the scene but should be running late if maintaining downside potential.

TOP UK GFK NOP Consumer confidence -21 in May vs -31 in April (forecast -31). Highest reading since December. Biggest monthly rise in GFK UK confidence since May 1993 Japanese core CPI up 0.6% on year (first positive reading since 2008). April retail sales at 4.8% y/y (vs -8% previous month)

The second release of Q1 GDP was unchanged at 1.8%, weaker than the consensus expectation for an upward revision to 2.2%. The main surprise was an unexpected downward revision to Q1 consumption spending, which was lowered to 2.2% (consensus 2.8%) from 2.7%.

> NZD/USD today shot right through the .8000/.8018 resistance area and came to within ticks of its early May high at .8122. > This may well be briefly breached so that stop levels will be triggered but we expect the 2009-11 resistance line at .8161 to lead to rejection, however (see next page).

Q1 11 real GDP was unchanged in the second estimate, rising 1.8% q/q (saar), below our forecast (2.0%) and consensus (2.2%) estimates.