The ugly equity market close notwithstanding, risk aversion continued to come off the boil in the NY session. The most telling statistic is the VIX (volatility index) close below 30 for the first time since mid-September. Nonetheless, the stock market remained shaky today as no less than four intraday rallies were promptly sold and the S&P closed down -0.2% on a sharp decline in the final 30 minutes of trading.

Treasuries ended the session about flat with the 10-year yield sitting near 3.24% while gold gained a nice $7 towards the top of the 917/930 range. The Ichimoku cloud top lurks at 935/936 and we have been highlighting this level as good resistance for the last few days now – a close above should open up potential to 950/970 next.

Economic data was on the light side with only US housing starts and permits out. Starts for the month of April slipped to a new record low of 458K from a prior 525K print. Permits were no better as they also registered an all-time low of 494K from 511K. The market was looking for starts at 520K and permits near 530K so the disappointment was palpable. The report throws some cold water on the notion that we are in store for a US housing renaissance in the near future.

FX traded in relatively wide ranges but most of the pairs settled near the NY open as the price action in ''risk'' was confounding. EUR/USD was sitting about 10 pips higher near 1.3630/35 and sees the short-term pivot near the 1.3600 mark now. Below targets the 200hr SMA which sat at 1.3571 at last look. The yen crosses were similarly little changed with USD/JPY sitting near 96.00/10 and EUR/JPY near 131.00/05. The 61.8% retracement of the 134.85 to 126.95 EUR/JPY move (now 131.85) should remain solid resistance. Look for equity marts to continue to dictate the pace in currency space overnight.

Upcoming Economic Data Releases (Asia Session) prior expected

  • 5/19 23:50 GMT JN  Housing Loans YoY  1Q  3.30%  - -
  • 5/19 23:50 GMT JN  Gross Domestic Product (QoQ)  1Q P  -3.20%  -4.30%
  • 5/19 23:50 GMT JN  GDP Annualized  1Q P  -12.10%  -15.90%
  • 5/19 23:50 GMT JN  Nominal GDP (QoQ)  1Q P  -1.60%  -3.40%
  • 5/19 23:50 GMT JN  GDP Deflator YoY  1Q P  0.70%  1.80%
  • 5/20 0:30 GMT AU  Westpac Consumer Confidence  MAY  8.30%  - -
  • 5/20 1:30 GMT AU  Wage Cost Index QoQ  1Q  1.20%  0.80%
  • 5/20 1:30 GMT AU  Wage Cost Index YoY  1Q  4.30%  4.20%