EURO
The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4160 level and was capped around the $1.4255 level. European Central Bank member Noyer reported credit is not in short supply internationally and said bank lending is stabilizing in the eurozone. He added business activity has registered “some improvement” over the most recent quarter but warned “a lot of uncertainty remains” and said the economic recovery remains “fragile.” Fed Chairman Bernanke testified before the Senate Banking Committee today and said “We expect the recovery to start off relatively slow as it is, in part, because of the consumer who is facing a damaged balance sheet, still has high debt on the balance sheet, wealth has been reduced in housing and equity price declines. So we don’t expect the consumer to come roaring back by any means, particularly with the labour market in the position that it is in.” Bernanke also said recent economic data “have been mildly encouraging.” The Fed Chairman yesterday indicated the Fed has an exit strategy, but reiterated official interest rates are unlikely to move higher anytime soon. Data released in the U.S. today saw the May housing price index rise 0.9% m/m and decline 5.9% y/y. In eurozone news, EMU-16 May industrial new orders were off 0.2%, defying expectations of a 2% monthly rise. Also, French consumer spending was up 1.4% m/m and 1.2% y/y. Euro bids are cited around the US$ 1.3435 level.
JPY / CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥93.05 level and was capped around the ¥93.85 level. Bank of Japan Deputy Governor Yamaguchi said he has no set view as to when the central bank should unwind its massive quantitative easing programs. Yamaguchi added there is “little chance of a renewed deflationary spiral in Japan.” Traders are paying close attention to the political kabuki in Japan ahead of next month’s mandatory general election with many expecting the Liberal Democratic Party to lose their stronghold on Japanese politics. Some economists believe the opposition liberal Democratic Party of Japan would not grow the economy sufficiently and would instead redistribute government spending too less growth-oriented policies. The Nikkei 225 climbed 0.73% to close at ¥9,723.16. 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 ¥132.10 level and was capped around the ¥133.60 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥165.05 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.10 level. In Chinese news, the U.S. dollar came off vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8297 in the over-the-counter market, down from CNY 6.8300. Chinese Vice Premier Wang Qishan said he will urge the U.S. to keep the U.S. dollar stable and U.S. and Chinese officials meet next week.
