EURO
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3565 level and was capped around the US$ 1.3720 level. Risk aversion returned to the markets as traders discounted recent economic improvements and challenged the view that the global banking sector is on the mend. Data released in the U.S. today saw March business inventories decline 1.0% to US$ 1.401 trillion. Additionally, April retail sales were off more than expected at -0.4%, underscoring the tenuous condition of final private demand. The ex-autos component was off 0.5% and the decrease in spending represented the eighth decline in ten months. Other data saw April import prices climb 1.6% m/m and decline 16.3% y/y. In eurozone news, German finance minister Steinbrueck said Germany is “surprised” by the European Commission’s plan to possibly conduct stress tests on banks. Data released in the eurozone today saw EMU-16 industrial production decline to a new record low in March, off 2.0% m/m and 20.2% y/y. Additionally, France reported its annual inflation rate rose 0.1% y/y in April, its lowest level in more than 50 years. European Central Bank member Weber cautioned that German and eurozone price inflation data may produce negative readings this month and remain there throughout the summer. Regarding the financial markets, he added “What we've seen in financial markets over the recent months is some return of confidence. I think that is something that is very important. Now people are back to evaluating risk, there's a lot more reasonable risk appetite. We're not yet back to a period where risk is again viewed in such a way that I would fear an underpricing of risk any time soon, but some reemergence of risk appetite is there.” Euro bids are cited around the US$ 1.2765 level.
JPY / CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥95.15 level and was capped around the ¥96.70 level. Risk aversion returned to the markets today as traders lack confidence that a sustainable rally is afoot in the financial markets. Data released in Japan overnight saw April corporate bankruptcy cases up 15.4% y/y while the March current account surplus was off 48.8% y/y at ¥1.486 trillion. Moreover, the March trade balance was off 89.3% y/y and April bank lending was up 3.0%. Additionally, it was reported that Japan’s historically-strong trade deficit withered in April, printing at -¥201.52 billion the first twenty days of the month. The Nikkei 225 yesterday stock index climbed 0.45% today to close at ¥9,340.49. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥129.35 level and was capped around the ¥132.40 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥144.15 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥85.95 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8225 in the over-the-counter market, up from CNY 6.8215.
