Risk was back on the table today with stock markets pushing higher both in Asian and in Europe. The AUD has benefitted from this sentiment, though in choppy conditions AUD/USD has failed to push beyond 0.8065. NZD/USDhas also rallied but to a smaller degree, the market potentiallynervous ahead of next week's Q1 GDP data and the anticipation that itwill registered a decline of -0.7% q/q. Sterlinghas posed a decent recovery following yesterday's weakness, pushinghigher vs the USD, the EUR and in particular vs the JPY. USD/JPY reached a high of 97.18 on rising risk appetite this morning but has subsequently slipped back.
There was little by way of key data releases this morning. JapaneseMay department store data confirmed ongoing weakness in the economy(-14% y/y), while German May PPI suggested a continued absence ofinflationary pressure (flat m/m). EU leaders were reported as stating their economy is on course for a sustainable economic recovery. Thismay have lifted the EUR modestly vs the USD but the tone in EUR/USDremains consolidative with 1.3880 and 1.3850 containing price actionthis morning.
Buying interest pushed EUR/GBP lower from theLondon open with this week's reversal higher in EUR/GBP bringing infresh GBP buying interest. There was no new newsto spark today's gains in the pound but the general tone of UK economicdata over the past month supports the outlook that the UK economy is inthe process of bottoming. Cable has seen highs of 1.6467, though is currently trading a touch lower.
There are no US releases scheduled for this afternoon. Canadian April retail sales data will be of interest. The market consensus stands at 0.1% m/m and -0.1% m/m for the core release. While the CAD has made modest gains vs the USD this morning on improved riskappetite, retail sales data in line with this consensus will stand tostrengthen psychological support in the USD/CAD1.100 level.
