The ''risk on'' rally lost some steam for the second consecutive day as worries that the market has moved up too far too fast remain. The S&P tested briefly below the crucial 900 level but ostensibly found some buyers down there and closed down a modest -0.1% on the day. Economic data was second-tier but continued to merely show that things are perhaps ''less bad'' than a few months ago.
The US trade deficit was a better than expected -$27.6 billion in March but the details of the report flagged the reality that export and import growth remain subdued. Economic optimism took a step back with the IBD/TIPP index slipping to 48.6 in May from 49.1 prior. This was well below the expected pop to 51.0 and suggests that ''hope'' could be peaking here. Last but not least, the April monthly budget statement illustrated the reality that a near -$2 trillion budget deficit is in the offing.
Euro weakened as traders shunned the riskier currency in an overall risk averse environment. EUR/USD shot down to a session low near 1.3590 but managed to recover and settled near 1.3640, down -50 pips in the session. EUR/JPY collapsed a sharp -140 pips towards 131.50 after the 133 level could not hold. USD/JPY was also lower as yen cross selling outpaced the ''safety bid'' under the buck. The commodity currencies traded with a relatively range-bound tone as oil continued to chop just below the $60/bbl mark.
Upcoming Economic Data Releases (Asia Session) prior expected
- 5/12 23:50 GMT JN Current Account Total MAR ¥1116.9B ¥1210.0B
- 5/12 23:50 GMT JN Trade Balance - BOP Basis MAR ¥202.1B ¥137.1B
- 5/13 0:30 GMT AU Westpac Consumer Confidence MAY 8.30% - -
- 5/13 4:00 GMT JN Bankruptcies (YoY) APR 14.10% - -
- 5/13 5:00 GMT JN Eco Watchers Survey: Current APR 28.4 30
- 5/13 5:00 GMT JN Eco Watchers Survey: Outlook APR 35.8 - -
