The price action in the NY session was lackluster to say the least. Many of the recently witnessed correlations held and the US dollar benefited from an overall bad day for the ''risky'' assets. US equities dropped more than -2% as the talk that the rally has gone too far too fast permeated the marketplace. Price to earnings valuations have made quite a comeback of late and this has many wondering about the relative ''cheapness'' of stocks. Gold was sitting near the middle of the day's 908/918 range as the precious metal was bid on the ''risk off'' trade but gains were capped on the back of the buck's strength. Treasuries were bought in size with the 10-year yield sinking more than -12 basis points to 3.16% after making 2009 highs last week.
FX traded with a sideways tone for the most part. EUR/USD was about 10 pips higher than the NY open near 1.3580 and the pair continued to struggle above 1.36 to boot. Look for good support on a break to 1.3540 next. The yen crosses were lower across the board with USD/JPY sinking -50 pips towards 97.40 while EUR/JPY shed -60 points into the 132.20/30 zone. Look for these pairs to remain under pressure if global equities continue to melt down overnight (the news that Mexico's credit rating will likely be downgraded is ominous for risk). The commodity currencies came under pressure despite oil remaining relatively better bid above the $58/bbl level. AUD/USD shed a modest -25 pips to 0.7580/90 but USD/CAD jumped more than 110 points to 1.1660/70 as Canadian home prices failed to surprise to the upside.
Upcoming Economic Data Releases (Asia Session) prior expected
- 5/11 22:45 GMT NZ Food Prices (MoM) APR 0.50% - -
- 5/11 23:01 GMT UK BRC April Retail Sales Monitor 11-May
- 5/11 23:01 GMT UK RICS House Price Balance APR -73.10% -70.00%
- 5/11 23:30 GMT US Bernanke Speaks on Stress Tests
- 5/12 1:30 GMT AU Home Loans MAR 0.40% 4.50%
- 5/12 1:30 GMT AU Investment Lending MAR -2.80% - -
- 5/12 1:30 GMT AU Value of Loans MoM MAR 2.70% - -
- 5/12 5:00 GMT JN Leading Index CI MAR P 75 77
- 5/12 5:00 GMT JN Coincident Index CI MAR P 86 85.8
