The risk rally continued in earnest into the NY session as equities gained on an overall theme of less government intervention. It started well ahead of the NY open with the landslide victory of the free-market government in India. This bodes well for pro-growth economic policies going forward and helped commodities remain better bid. US Treasury Secretary Geithner affirmed that he does not believe the government should be involved in setting compensation limits and towards the end of the session, we had three prominent US banks announcing that they have applied to repay TARP money (a non-trivial $45 billion). This helped the S&P jump more than 3% to just below 910 and above the Tenkan line which lurked at 904.56. The close is a technically bullish signal for the days ahead.
Risk taking was detrimental to the US dollar as investors shunned seemingly safe haven assets. Treasuries sank with the 10-year yield rocketing 9 basis points to 3.22%. EUR/USD extended gains 50 pips and was sitting near the session highs by 1.3550 as the close approached. The 100hr SMA which lurks at 1.3569 looks like the next immediate hurdle here, with more resistance at 1.3600 next. The yen crosses were supported on the ''risk on'' flavor. USD/JPY managed a 55 pip gain towards 96.40 while EUR/JPY saw a more aggressive 120 pip gain into the 130.50/60 area. We would expect EUR and the JPY-crosses to remain better bid if the US equity market gains extend to overseas stock marts overnight.
Upcoming Economic Data Releases (Asia Session) prior expected
- 5/18 22:10 GMT AU RBA Governor Stevens Speaks in Sydney
- 5/19 1:30 GMT AU Reserve Bank's Board May Minutes
- 5/19 2:30 GMT AU Treasury Secretary Henry Speaks on Economy
- 5/19 4:30 GMT JN Industrial Production (MoM) MAR F 1.60% - -
- 5/19 4:30 GMT JN Industrial Production YOY% MAR F -34.20% - -
- 5/19 4:30 GMT JN Capacity Utilization (MoM) MAR F -11.90% - -
- 5/19 6:00 GMT JN Machine Tool Orders (YoY) APR F -80.40% - -
