Market Brief
The Usd was stable in the Asian session, as traders took a short pause on selling the greenback. The EurUsd traded down to 1.4102 from 1.4180, while the UsdJpy stuck in cloud covering traded in a tight range to 96.80 to 96.50. Yesterday, the S&P climbed to a 6 month high, while 10yr Treasuries closed at 3.67% up significantly from Friday. While Credit default swaps are stable and 10yr TIP spread widen (signaling inflation), it seems that the risk of US default is not an issue but higher inflation is clearly a core driver. In regard to the US, the market is expecting a combination of stronger growth but higher inflation and a weaker Usd. EUR trading, as the alternative to USD, appears to be benefiting from anxiety over the suitability of US monetary and fiscal policy as economic conditions improve. Treasury Secretary Geithner appears to have soothed Chinese officials over the USD outlook. With proactive comments such a stating Chinese USD denominated financial assets were “safe” and he “believe in a strong dollar” himself. We are wondering how creditable these comments really are given recent policy decisions and the uncertain economic outlook.
In Australia , the RBA left the cash rate unchanged at 3%, as was widely expected. The accompanying statement was slightly dovish with the key phrase statement "nonetheless, the prospect of inflation declining over the medium term suggests that scope remains for some further easing of monetary policy, if needed". However, right now Usd behavior and global inflation risks will be more central for Aud price action than domestic conditions. With yesterday's better than expected PMI, signaling China's economy continues to rebound and commodity in demand, we expect the AUD to continue to outperform.
Today’s data calendar is devoid of top tier data or events – UK mortgage approvals, US pending homes sales and a speech from Dallas Fed President Fisher are the highlights.
| Global Indexes | Current Level | % Change |
| Nikkei 225 Index | 9,704.31 | + 0.27 |
| Hang Seng Index | 18,389.08 | - 2.64 |
| Shanghai Index | 2,724.30 | + 0.11 |
| FTSE 100 Index | 8,721.44 | + 2.60 |
| DAX Index | 5,147.86 | - 0.14 |
| SMI Index | 5,436.31 | + 0.10 |
| DJIA futures | 8,654.00 | - 0.39 |
| World Markets | Current Level | % Change |
| Gold | 971.40 | - 0.39 |
| Silver | 15.56 | - 0.21 |
| VIX | 30.04 | + 3.87 |
| Crude wti | 68.08 | - 0.72 |
| USD Index | 79.34 | + 0.23 |
| Todays Calender | Estimates | Previous | Country / GMT |
| Construction PMI, index May | -- | 38.0 | GBP / 08.28 |
| BoE mortgage approvals, K Apr | 41 | 39 | GBP / 08.30 |
| BoE net mortgage lending, £ bn Apr | 1.0 | 0.8 | GBP / 08.30 |
| BoE net consumer credit, £ bn Apr | 0.1 | 0.1 | GBP / 08.30 |
| Unemployment rate, % Apr | 9.1 | 8.9 | EUR / 09.00 |
| Total vehicle sales, mn (saar) May | 9.3 | 9.3 | USD / -- |
| PMI, index May | -- | 49.2 | SGD / 13.30 |
| Pending home sales, % m/m (y/y) Apr | 0.3 (-3.0) | 3.2 (1.1) | USD / 14.00 |
Currency Tech
AUDUSD
R 3: 0.8583
R 2: 0.8520
R 1: 0.8378
CURRENT: 0.8082
S 1: 0.790
S 2: 0.7800
S 3: 0.7703
EURJPY
R 3: 139.75
R 2: 138.57
R 1: 137.40
CURRENT: 136.32
S 1: 133.90
S 2: 131.50
S 3: 130.73
USDSGD
R 3: 1.4748
R 2: 1.4665
R 1: 1.4580
CURRENT: 1.4415
S 1: 1.4320
S 2: 1.4270
S 3: 1.4165
- S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot
