EURO
The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4245 level and was supported around the US$ 1.4100 figure. U.S. equity markets staged a further recovery in response to better-than-expected U.S. pending home sales data that saw an increase of 6.7% in April, significantly above the 0.4% estimate. There is a growing consensus that the U.S. economy has bottomed out. May ADP employment change data and ISM non-manufacturing data will be released tomorrow. In eurozone news, the EMU-16 unemployment rate escakated to its highest level since September 1999, rising to 9.2% from 8.9% in March. Notably, 3.1 million people have lost their jobs in the eurozone over the past year and this will have an ongoing appreciable impact on final private demand. Other data saw French April producer price inflation off 0.6% m/m and 5.5% y/y. The European Central Bank convenes on Thursday and most traders believe policymakers will keep the ECB’s main refinancing rate unchanged at the current record low of 1.0%. Euro bids are cited around the US$ 1.3435 level.
JPY / CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥95.30 level and was capped around the ¥96.65 level. The U.S. dollar fell sharply across the board as traders reduced their long U.S. dollar exposure on fears that major foreign holders of U.S. dollar assets may have a declining risk appetite for U.S. assets. The Nikkei 225 stock index climbed 0.3% to close at ¥9,704.31. U.S. dollar offers are cited around the ¥104.15 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥137.45 level and was supported around the ¥135.75 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥159.20 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥90.55 level. In Chinese news, the U.S. dollar strengthened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8298 in the over-the-counter market, up from CNY 6.8257.
STERLING
The British pound appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6595 level and was supported around the $1.6320 level. Many data were released in the U.K. today. First, April net lending to individuals expanded ₤1.287 billion, up from a revised ₤693 million in March. Second, May PMI construction improved to 45.9. Third, April mortgage approvals increased to 43,000 from 40,000. Fourth, mortgage approvals improved to 43,201, an eleven-month high that indicated the housing sector may be improving. Fifth, the April M4 money supply expanded 0.2% m/m and 17.4% y/y. Sixth, BSA reported April gross mortgage lending was unchanged from March at ₤1.5 billion. Cable bids are cited around the US$ 1.6070 level. The euro appreciated vis-à-vis the British pound as the single currency tested offers around the ₤0.8670 level and was supported around the ₤0.8600 figure.
