The U.S. dollar trade calm

Good Morning,

- The U.S. dollar trade calm on Tuesday morning, after yesterday's gains as latest economic data kept expectations alive for an interest rate hike from the Fed. The dollar index was also stable at 97.40 level, after closed out May with a 2.4 percent climb, its tenth monthly gain in the last 11.

- U.S. stocks closed higher in a choppy session as a deal by Intel Corp to acquire Altera for $16.7 billion helped lift the technology sector.

- Greece creditors meeting in Berlin has now ended without any fresh news.

- The chiefs of the European Central Bank and the International Monetary Funded headed to Berlin for talks late on Monday with the leaders of France and Germany on how to proceed with Greek debt negotiations.

- EU officials said to possibly present Greece plan in next days.

- Data on Monday showed U.S. consumer spending remained flat in April, construction spending and manufacturing picked up.

- Boston Fed President Eric Rosengren, said that while he would like to normalize rates as soon as possible, current U.S. economic conditions do not warrant a rate hike at this time, with the Greek debt crisis and a slowdown in China also concerns.

- Bank of Tokyo-Mitsubishi on EUR/USD: The reversal in EUR/USD since the 15th May leaves Bank of Tokyo-Mitsubishi (BTMU) confident in its view that EUR/USD will continue to trend weaker and breach parity later this year. "Long-term sovereign yields have started to drift lower again and the ECB intention to front-load QE debt buying ahead of illiquid summer trading conditions underlines the determination to implement its program in full. The ECB monetary policy meeting on 3 rd June is likely to include some upward revisions to growth and possibly inflation but we expect President Draghi to stress the ECB’s determination to carry out the QE program in full," BTMU adds. "Portfolio flow data continue to indicate strong net capital outflows from fixed income investments and with yields set to remain depressed in the eurozone relative to abroad, we expect that capital flow to continue weighing on the euro," BTMU projects. In line with this view, BTMU remains comfortable with its below consensus EUR/USD forecasts keeping its end-2015 EUR/USD target at 0.9800.

- Australia left its key interest rate unchanged at a record low and was coy about whether further cuts would be needed to boost growth, sending the currency higher. Central bank Governor Glenn Stevens and his board left the cash rate at 2 percent in Sydney Tuesday, as predicted by traders and economists. “monetary policy needs to be accommodative” as the economy is likely to operate with spare capacity “for some time yet,” he said in a statement.

- Statement by RBA Glenn Stevens: The global economy is expanding at a moderate pace, but some key commodity prices are much lower than a year ago. This trend appears largely to reflect increased supply, including from Australia. Australia's terms of trade are falling nonetheless. The Federal Reserve is expected to start increasing its policy rate later this year, but some other major central banks are continuing to ease policy. Hence, global financial conditions remain very accommodative. Despite some increases in bond yields recently, long-term borrowing rates for sovereigns and creditworthy private borrowers remain remarkably low.

- Australia's current account deficit was $10.7 billion in the March quarter, seasonally adjusted, from $10.2 billion in the previous quarter, official figures show. The surplus on goods and services rose $1.82 billion in real terms, which would add 0.5 percentage points to growth in the March quarter measure of gross domestic product (GDP).

Have a nice Day !