U.S. dollar rallies on upbeat U.S. ISM data: Jun 2, 2015

Market Review - 01/06/2015 22:44GMT 
 
U.S. dollar rallies on upbeat U.S. ISM data

U.S. dollar opened firm against the Japanese yen on Monday. The pair rose to 124.34 in Asian morning but profit-taking below last Thursday's 124.46 high knocked price lower. The greenback retreated briefly to 123.86 in New York morning before rallying above 124.46 resistance to a fresh 12-1/2 year peak of 124.92 on upbeat U.S. ISM data.

Japan's Amari said 'important to strengthen economy enough so that planned sales tax hike in Apr 2017 won't nudge Japan back into deflation.' Fed's Rosengren said conditions for Fed rate hike not yet met; little evidence of snapback from Q1 economic weakness; first-half growth looks to be well below expected; if slow growth continues, continued drop in unemployment rate unlikely; with disappointing growth, won't be confident on inflation; slow growth a compelling argument for continued patience.

Fed's Fischer said 'should not make the mistake of believing we have put an end to financial crises; successful reforms can breed complacency about risks; QE is effective when rates are near 0; should not rule out using monetary policy to address financial stability concerns.'

The single currency ratcheted lower from last Fri's high at 1.1006 to 1.0891 in Europe on Monday before rebounding to 1.0979 after the release of less-than-expected U.S. core PCE price index but only to fall again to 1.0887 on dollar's strength due to upbeat U.S. ISM data.

Bundesbank executive Andreas Dombret said situation in Greece is critical, direct danger to European banks is relatively small. A senior official at Germany's Bundesbank told a newspaper on Mon that the situation in Greece is critical but the direct danger to European banks is relatively small,

German government spokesman said 'Greece will not be central topic at meeting of Merkel, Hollande n Juncker but can't rule out it won't come up; phone call between Merkel, Hollande n Tsipras on Sun took place in constructive atmosphere.' Italy EconMin Padoan said 'Greek exit would make eurozone a different animal; Greek exit would be a reason to accelerate eurozone integration.'

Despite staging a brief bounce from Asian low at 1.5259 to 1.5305 on Monday, the British pound ratcheted lower in Europe after the release of downbeat U.K. mfg PMI. Cable dropped to 1.5197/98 and then rebounded to 1.5272 on short-covering but only to fall again to 1.5170 after upbeat US ISM.

Foreign Secretary Philip Hammond said on Monday that the British government will be "selling hard" the advantages of staying in the European Union in a national referendum if it can secure a good enough package of reforms. Prime Minister David Cameron, who won a second term in office last month, has promised to reform Britain's EU ties before a referendum on continuing membership by the end of 2017.

Tuesday will see the release of Australia's current account deficit, RBA rate decision and rate statement, Germany's unemployment rate, U.K. Markit/CIPS construction PM, mortgage approvals and mortgage lending, eurozone inflation, producer prices, U.S. Redbook, durable goods and factory orders.