Previous session overview
The euro fell against the U.S. dollar and the yen in Asia Tuesday, giving back some of its recent gains, while the Australian dollar received only a minor boost after the country's central bank kept interest rates unchanged at 3%.
The Reserve Bank of Australia's decision was in line with expectations, and the central bank also left the door open to further cuts. Still, the news is a mild positive for the Aussie dollar, as it will maintain positive interest rate spreads against other major currencies for the time being.
Meanwhile, the euro was hurt by concerns over the euro zone's poor economic outlook ahead of a key meeting of the European Central Bank later this week. The single currency was largely unmoved by news that Swiss bank UBS AG (UBS), one of the hardest hit in the global financial crisis, made a net loss for the first quarter and revised lower year-earlier earnings due to accounting errors and a reorganization of its private bank.
EUR was under pressure during early Europe as the EU revised GDP forecasts for the Eurozone and countries downwards. Comments from Obama proposing to outlaw offshore tax avoidance techniques also saw the USD strengthen, and EUR fell a cent to around USD1.3215.
The Sterling was poised below USD1.500 most of the day until surging US stocks encouraged the market to break above late in the US session. The BOE meet on Thursday although the market is expecting no change to the 0.5% rate.
US Dollar-Yen fell in Yesterday's trading. Japan celebrated a holiday, and so volatility and liquidity was low in the first half of trading. The pair was unable to move above the JPY99.55 level and fell in early afternoon trading in NY.
The Australian dollar rose and bond prices fell Tuesday due in part to the Reserve Bank of Australia's decision to keep interest rates on hold, though jitters surrounding the U.S. banking system tempered the Australian currency's gains.
Market expectation
The euro and pound are lower Tuesday, reflecting a pause in the recent decline in aversion to risk. While both may have a bit more room to gain against the dollar, to USD1.3519 and USD1.5037 respectively, a period of consolidation is likely before more advances, according to traders.
EURUSD extending lows into European dealing as stops under USD1.3350 are put under pressure. Trader's reports next area of demand coming in around USD1.3310/00 with additional stops lurking below. Light order boards noted on an extended move due to the strong rally seen in NY time Monday USD1.3213-USD1.3426).
EURGBP hitting fresh lows for the day under stg0.8880, with traders reporting stops building in the stg0.8870 area this morning.
Central and Eastern European currencies and debt will be the focus Tuesday as London traders return from a long weekend to grapple with the gloomy 2009 economic projections for the region issued by the European Commission Monday.
Most important events of the day
| 5-May | Count. | Event | For | Unit | Imp. | Act. | Cons. | Prev. |
| 1:30 | AU | Building approvals | Mar | % m/m | Low | 2.8 | 7.8 | |
| 1:30 | AU | Building approvals | Mar | % y/y | Low | -18.9 | -25.5 | |
| 2:30 | US | San Francisco Fed President Yellen to speak at the University of California on the financial turmoil | Low | |||||
| 2:30 | US | Fed President Yellen will speak on "Issues raised by the credit crunch and recession" at the University of California, Berkley | Low | |||||
| 4:30 | AU | RBA Board Meeting and Cash Rate Announcement | High | |||||
| 5:45 | CH | SECO Consumer Confidence | Q2 | index | Med | -25 | -23 | |
| 7:00 | NO | Manf. PMI (sa) | Apr | Index | Low | 39.5 | 38 | |
| 7:00 | ES | Unemployment | Apr | k | Low | 115 | 123.5 | |
| 8:00 | GB | Halifax House Price Index (5th-8th) | Apr | % 3m y/y | Low | -17.5 | ||
| 8:00 | GB | Halifax House Price Index (5th-8th) | Apr | % m/m | Low | -1.9 | ||
| 8:30 | GB | CIPS Constr. PMI | Apr | index | Low | 31.9 | 30.9 | |
| 8:30 | GB | DCLG House Prices | Mar | % y/y | Low | -12.3 | ||
| 9:00 | EU | PPI | Mar | % y/y | Med | -2.9 | -1.8 | |
| 9:00 | EU | PPI | Mar | %m/m | Med | -0.5 | -0.5 | |
| 10:30 | EU | European Competition Commisioner Kroes will speak on fining policies at the Herbert Smith conference, Brussels | Low | |||||
| 10:45 | US | Boston Fed President Rosengren will speak at the Institute of Regulation and Risk in Hong Kong | Low | |||||
| 12:00 | FR | Budget Minister Woerth will speak on public finances, Paris | Low | |||||
| 14:00 | US | ISM Non-Man | Apr | index | Low | 42 | 40.8 | |
| 14:00 | US | Fed Chairman Bernanke will testify before the Joint Economic Committee on the US economy, Washington | Low | |||||
| 15:00 | US | ISM Services | Apr | index | Low | |||
| 17:15 | US | Minneapolis Fed President Stern will speak at the Business Law Institute | Low |
