Previous session overview
A reported worsening in credit conditions for large German companies weighed on the euro against the dollar and yen in Asian trading Monday amid worries that shaky European data would increase risk aversion.
A report in the German magazine Der Spiegel, followed by a U.K. Telegraph newspaper report released during Asian hours, said that a poll by the German Chambers of Industry and Commerce would show this week that financing problems are deepening in Europe's largest economy.
It was a reminder that in spite of brighter signs in the global economy, there may yet be trouble ahead. The reports caused the euro to fall toJPY137.22, down from JPY137.75 in New York Friday. Against the dollar, it was at USD1.3946, down from JPY1.3995 last week.
The single currency tumbled to as low as USD1.3935 versus the dollar in New York morning after the release of University of Michigan consumer sentiment survey as the data was somehow mixed. Although it rose to 69 from 68.7 in May, it fell short of economists' forecasts of 69.5. However, the euro was able to recover some of its losses versus the U.S. currency ahead of the G8 meeting in the weekend.
The sterling also fell on profit-taking. Dovish comments from Bank of England (BOE) officials voicing concerns about how sustainable the UK recovery is also weighing on the sterling. This contrasts with yesterday's comment from BOE policy maker Andrew Sentence said the UK recession may be "bottoming out".
The Australian dollar fell in Asia Monday, hit by renewed strength in the U.S. dollar, while interest rate futures gained on the back of a rollover of expiring contracts.
Market expectation
The dollar is gaining against the euro and pound on Monday as global stock markets fall in a renewal of the quest for shelter against risk.
EURUSD break below USD1.3890 triggers stops and allows rate to extend easing to USD1.3885 into early European trading. The break below USD1.3894 (76.4% of the rally from USD1.3806 to USD1.4178) will add to the current bearish tone with technical traders looking for a deeper move toward that recent low at USD1.3806. Interim support noted at USD1.3855/50 ahead of USD1.3810/00.
Sterling proving more resilient versus dollar demand into early Europe provides cable with buoyancy while euro-dollar remains soft and allows euro-sterling to squeeze down to stg0.8505. Cable bids seen placed from USD1.6320 to USD1.6310, more toward USD1.6290 with stops below. Resistance seen placed at USD1.6380/85.
Analysts described the local session as uneventful, as traders await fresh direction from the European and U.S. markets ahead of the Reserve Bank of Australia's monthly policy meeting minutes Tuesday. Currency traders will be looking for the RBA to expand on whether a further rate cut remains an option for policy makers, especially given moves by one major retail bank to hike its mortgage rates citing higher funding costs.
European stocks are expected to open marginally lower Monday, with commodity stocks set to weigh on the market as the week starts.
Most important events of the day
| 15-Jun | Count. | Event | For | Unit | Imp. | Act. | Cons. | Prev. |
| 0:00 | JP | BoJ MPC Meeting (15th-16th Jun) | Low | |||||
| 1:30 | AU | Lending Finance | Apr | % m/m | Low | 12.9 | ||
| 6:00 | FI | CPI | May | % y/y | Low | |||
| 7:15 | CH | Producer Import prices | May | %m/m | Low | -0.2 | ||
| 7:15 | CH | Producer Import prices | May | %y/y | Low | -4.8 | -3.6 | |
| 7:15 | EU | ECB Executive Board member Tumpel-Gugerell gives remarks at an Italian Banking Association seminar, Rome | Low | |||||
| 8:00 | IT | Labour Costs | Q1 | % q/q | Low | 1 | ||
| 8:00 | IT | Labour Costs | Q1 | % y/y | Low | 3.5 | ||
| 8:00 | NO | Trade Balance | May | NOK bn | Low | 24.4 | ||
| 12:30 | US | Empire State Survey | Jun | index | High | -4.6 | -4.55 | |
| 12:30 | CA | Motor Vehicle Sales | Apr | % m/m | Low | 6.3 | ||
| 12:30 | CA | Manufacturing sales | Apr | % m/m | Low | -2.7 | ||
| 12:45 | US | Fed Board Governor Tarullo to speak at the N.Carolina Bankers Association annual convention on "Large banks and small banks in an era of systemic risk regulation | Low | |||||
| 13:00 | US | Treasury International Capital System (TICS) | Apr | USDbn | High | 60 | 55.8 | |
| 13:00 | BE | Trade Balance | Apr | Eur mn | Low | 609.5 | ||
| 13:00 | EU | ECB to present "2009 Financial stability review" with ECB Vice President Papademos attending | Low | |||||
| 13:30 | US | Chicago Fed President Evans to give remarks on the US economic outlook before the Executives' club of Chicago joint committee | Low | |||||
| 14:30 | CA | BoC release Financial System Review | Low | |||||
| 17:00 | US | NAHB Builders survey | May | index | Low | 17 | 16 | |
| 17:00 | EU | ECB Executive Board member Tumpel-Gugerell and ECB Governing Council member Nowotny to speak at an Alpbach European Forum event in Vienna | Low | |||||
| 22:00 | US | Fed Board Governor Duke to speak on "The Fed's responses to the financial crisis" at an event in Washington | Low |
