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Market Session Recaps

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New York Session

Tue, Jun 17 2008, 21:49 GMT
by Forex.com Research Desk

FOREX.com

A bad batch of US economic data weighed on the Greenback in NY trading as it gave back gains from the London session.  Core producer prices (ex food and energy) were in line with market expectations (0.2%) while housing starts (975k) and industrial production (-0.2%) came in below consensus for May.  So while the inflation landscape did not materially change, the US economic outlook likely depreciated as it became a little clearer that the housing market remains in the dumps while industrial production continued to dwindle.  The paltry data pushed EUR/USD from an open near 1.5485 to a session high near 1.5525 -- the pair eventually closed near the 1.5512 mark.

USD/JPY traded lower in the session as US bond yields and a more than 100 point drop in the Dow Jones Industrials fueled a small rally in Yen.  US 10-year yields shed 7 bps to 4.20% and 2-year yields plunged more than 13 bps to 2.90%.  USD/JPY opened near 108.24 and was sitting near the session lows around 107.94 when trading came to a close.  The fact that US yields remain relatively elevated looks to be putting a near-term floor under the cross around 107.90/108.00.  We would likely have to see an appreciable deterioration in US inflation expectations or economic data in order to bring US yields substantially lower and in turn see a sizeable decline in USD/JPY.

In central bank speak, the ECB's Mersch's offered some comments which dovetail with a lot of what we have heard from other ECB officials of late, as he played down the probability of rate hikes beyond July.  Given that the futures market continues to price in at least 50 bps in rate hikes through the end of this year, EUR/USD could be poised for a pullback if ECB officials continue to carry on about July being a one and done deal.

The Australian Westpac Leading Index for April is the data highlight for the Asia session.  Though it is a dated number it could very well be a major market mover as the direction of economic growth is critical in gauging what the RBA's next move will be.
 

Upcoming Economic Data Releases (Asia Session):

• 6/17  23:50 GMT JN BoJ Monetary Policy Meeting Minutes for April 30 17-Jun
• 6/17  23:50 GMT JN BoJ Monetary Policy Meeting Minutes for May 17-Jun 
• 6/17  23:50 GMT JN BOJ to Publish Minutes of April 30, May 19-20 Board Meetings 17-Jun 
• 6/18  0:30 GMT AU Westpac Leading Index (MoM) APR                    0.20%         - -
• 6/18  1:30 GMT AU Preliminary BoP Imports MoM sa MAY               -3.00%         - -

Published on  Tue, Jun 17 2008, 21:50 GMT