- USD: Lower, Giethner predicts slow US recovery, Greek debt worries ease slightly
- JPY: Mixed, tracking equities, service sector sentiment improves
- EUR: Higher, Greek and Spanish credit default spreads narrow as EU says it will monitor Greek debt
- CHF: Higher, Swiss retails sales rise, gains in cross trade to the EUR
- GBP: Lower, election polls increase the risk of a hung parliament, fresh concern about UK debt rating
- CAD and AUD: AUD & CAD higher, Australian coal deal with China, Canadian housing starts rise 5.8%
Overview
USD traded mixed Monday with the main focus on sovereign debt risks in Europe. EUR experienced a modest recovery as EU officials and central bankers from the G7 said they were confident that Greece will be able to cut its deficits. Greek and Spanish default swap spreads narrowed a bit in reaction to the EU and G-7 pledge to monitor Greece’s deficit reduction plans. EUR gains were limited by report of a larger than expected decline in EU Sentix index. CHF traded higher supported by report of a sharp rise in Swiss retail sales. GBP continued to underperform pressured by concern about its UK AAA sovereign debt rating as UK polls released over the weekend suggest neither the Conservative or Liberal party will win a majority in parliament. Threat of a hung UK Parliament will increase the risk to UK sovereign debt rating. JPY traded mixed to firm supported by weaker equity market trade. Commodity currencies traded higher in reaction to a rally in gold and higher crude prices. AUD was supported by report that Australia has secured a huge coal deal with China. There was limited reaction to a statement from US Treasury Secretary Geithner that he does not see the risk of a double dip recession but he predicts a slow recovery for the US economy. Geithner went on to say that the US will never lose its AAA debt rating and that the US deficit will shrink. US December Employment Trend Index rose to 93.2 from 92.3 last month. The trade will continue to watch developments in regard to the fiscal outlook in peripheral European nations.
Today’s US data:
No major US economic data was released in today's trade.
Upcoming US data:
This week’s US economic calendar includes the February 9th release of December wholesale inventories and sales. Inventories are expected to rise by 0.5% and sales are expected to rise by 1%. On February 10th December trade balance and the Treasury budget will be released. The trade balance is expected at -36.5bln compared to -36.4bln last month. The Treasury budget is expected at -60.5bln compared to 63.5bln last month. On February 11th initial jobless claims for week ending 02/06 will be released expected at 470k compared to 480k last week. January retail sales and December business inventories will also be released on February 11th. The retail sales are expected to rise by 0.5% compared to -0.3% last month. Inventories are expected unchanged at 0.4%. On February 12th February University Michigan consumer sentiment will be released expected at 74
compared to 74.4 last month.
