Dollar weakness came back to the fore in the NY session as the ''risk on'' trade was in full effect once again. US equities extended gains about 1% despite a report on chain store retail sales showing the annual rate dipping to -4.6% in May from +0.7% prior. Risk taking was extremely evident in the bond market as US Treasuries were shunned in size. The 10-year yield jumped more than 16 basis points back up to the 3.70% area. Gold bucked the trend and rallied with commodities overall. The precious metal added $17 towards 980/981 after finding demand into the 962/961 zone. Oil regained its recent losses and nearly printed $70/bbl, up more than 4% on the day.
The deck was stacked against the buck. EUR/USD rallied a sharp 100 pips after ECB President Trichet failed to offer dovish commentary on the eurozone. He alluded to worries about recent EUR strength but said only that he was glad to hear that the US supports a strong dollar policy. The commodity currencies screamed higher. AUD/USD shot up 90 points into the 0.8020/30 area while USD/CAD sank a steep -175 pips to 1.0970. The yen crosses were better bid but mostly range-bound. The big level for USD/JPY is the 200-day SMA which sits at 96.86 and this will be closely watched overnight now. Expect overseas marts to follow US stocks higher, which would be supportive for the yen crosses overall.
Upcoming Economic Data Releases (Asia Session) prior expected
- 6/4 23:30 GMT AU AiG Perf of Construction Index MAY 36.5 - -
