Risk taking came back to the fore in the NY session as an early equity market rally remained intact. US stocks jumped more than 2.5% in broad terms and the S&P managed to close back above 900 to boot. Treasuries were sold with the 10-year yield jumping to 3.54% despite a healthy 2-year note auction which saw a 2.94 bid/cover ratio. Gold came off recent highs though remains above the psychologically important 950 level and better bid while above the top of the Ichimoku cloud at 936/935 as well.

The risk rally was on the back of a better than expected US consumer confidence number, which printed 54.9 in May from 40.8 the prior month. However, the details of the report were not as rosy as the headline with most of the increase coming in the expectations component, which rose to 72.3 from 51.0 prior. So "hope" continues to rule the day. The present situation increased modestly to 28.9 from 25.5 and remains below the January level. The key labor differential improved slightly to a still dismal -39.0 from -41.7 and still well below the -34.0 January read. This suggests little relief on the employment front in the short-term. Overall the report was better than expected but the surge in equities on the follow is likely overdone to say the least.

The US dollar weakened on the back of the positive economic news. GBP/USD rocketed 75 pips higher towards 1.5930 and 1.6000 remains within striking distance. EUR/JPY jumped 75 pips as well to 132.80/90 while USD/JPY was unchanged from the NY open as USD weakness was in line with that of the JPY. Crude oil added more than 1% to sit comfortably above $62/bbl and this helped EUR/USD grind about 80 pips higher towards 1.3980/90. The pair has seen a near 90% correlation with crude prices and thus any increase in the commodity should see commensurate gains here.

Upcoming Economic Data Releases (Asia Session) prior expected

  • 5/26 23:50 GMT JN  BoJ Monetary Policy Meeting Minutes
  • 5/26 23:50 GMT JN  Merchnds Trade Balance Total  APR  Â¥11.0B  -Â¥55.0B
  • 5/27 0:30 GMT AU  Westpac Leading Index (MoM)  MAR  -0.30%  - -
  • 5/27 3:00 GMT NZ  NBNZ Business Confidence  MAY  -14.5  - -
  • 5/27 5:00 GMT JN  Small Business Confidence  MAY  30.8  - -