Forex News

Commodity rally lifts FX markets US sovereign CDS worth watching as it may indicate further USD weakness

EUR/GBP EUR/GBP has confirmed the ST double bottom drawn at 0.8675/80. 0.8900/05 and 0.8925/30 should be the next major steps on the way back to the 0.9045/50 resistance area and the 0.9140/50 region.

EUR USD (1.4290) The Fed publicised the minutes from the April 26- 27 FOMC meeting yesterday. The Committee discussed tightening policy by first halting the reinvestment of principal on maturing paper.

Today’s highlights: EUR/USD: Solid rebound from 1.4195 (now also key basing line) to new recovery peak.  Also above the 55-DMA, through the Friday peak, 1.4341, is needed to confirm a base

– G10 and Asian FX slightly stronger vs USD, Asian equities mixed – UK retail sales are likely to only provide limited GBP support – We have revised our USD “Fair Value” estimates stronger vs G10 – Australia and Sweden lead cross border M&A flows

News BG: Mixed – Cabinet reshuffle of some top positions (p2) HR: Positive – Croatia meets the justice and fundamental rights conditions for EU accession (p2)

G10 Currencies EUR-USD: EUR-USD was able to stabilise somewhat in the Asian trade this morning and has temporarily breached the 1.43 mark.

Overnight equity markets Nikkei          -0.43%          9’620.82 S&P500          +0.88%          1’340.68 Dow             +0.65%          12’560.18 Nasdaq          +1.14%          2’815.00

GBP/USD has sold off towards its one year uptrend at 1.6082. While we would allow for this to hold the initial test, we have some doubts that it will remain capable of reasserting the long term bull trend.

Without any noteworthy data releases scheduled in the Eurozone, impetus for the Bund future this morning could come from UK retail sales and, probably more importantly, from eurogovy supply activities.

TOP *JAPAN 1Q GDP SHRINKS ANNUAL 3.7% vs -1.9% expec S&P SAYS SEES POSSIBILITY OF DOWNGRADE IF NZ’S EXTERNAL POSITION DOES NOT IMPROVE