Another seesaw ride in the currency markets to start the day in European trade. The pattern over the last couple days has the dollar under early pressure and then we have seen dip buyers emerge. The session so far has highlighted by several key pieces of European economic data. The most relevant releases began with German Preliminary first quarter GDP and April CPI data. GDP came in much better than expected at 1.5% against forecasts for +0.7%, while the CPI figures were in line at -0.2% mom and +2.4% yoy. We saw an already bid EURUSD react to the better than expected GDP data and push back through 1.5500. It looked like market was caught a bit short causing the pair to squeeze just shy of 1.5550. The pair then bounced between 1.5540-20, as the reported stop above 1.5555 could not get triggered.
We then had a look at Eurozone first quarter GDP and April CPI. The GDP data also surprised to upside as it came in +0.7% against forecasts for +0.5%, and the CPI data for April came in at +0.3% mom and +3.3% yoy in line with expectations. Despite the CPI reading coming in well above the ECB's target rate of just under 2%, EURUSD longs ran for the exits and the pair dealt back down to 1.5480 area, as weak stops were triggered back through 1.5500.
Cable continues to trade relatively heavy as the pair made a push for 1.9500 on the back of EURUSD buying, but quickly came under pressure fresh shorts were established. AUDUSD has traded relatively firm despite the recent trendline break in the .9360 area. We did see a squeeze pair back into the .9380 area but it came under pressure when dollar dip buyers emerged. USDJPY has been rather volatile as it came under pressure with the initial dollar selling but found its footing down in the 104.50 area. We have subsequently bounced back just above 105.00. The recent uptrend remains intact but there are cracks starting to emerge.
