• US Jobless Claims 360k f/c 330k prev r to 328k from 323k
• US Continuing Claims 3.01mm f/c 3.0mm prev r to 3.01mm from 3.00mm
• US Apr CPI m/m -0.4% f/c -0.2% prev -0.2%; Core CPI m/m 0.1% f/c 0.2% prev 0.1%
• US Apr CPI y/y 1.1% f/c 1.3% prev 1.5%, Core CPI y/y 1.7% f/c 1.8% prev 1.9%
• US Apr Housing Starts 853k f/c 973k prev r to 1.02mm from 1.03mm
• US May Philly fed Business Index -5.2 f/c 2.4 prev 1.3
• Turkey C. Bank cuts benchmark one-week repo rate to 4.5% from 5.0%
• Moody’s upgrades Turkey’s Govt bond rating to BAA3, stable outlook
• European Industry Commissioner Tajani: Euro is too strong, ECB should manage the ccy to help exports
• EU’s Barroso: We are against competitive devaluations, important Euro is stable-DJN
• IMF: Unconventional mon pols have worked but exit could be bumpy; CB losses from exit could be significant share of GDP under some scenarios, but would have minimal economic impact
• Fed’s William: Fed could reduce pace of asset buys as early as this summer if jobs improve, end them by year’s end
• Fed’s Fisher: Doesn’t ‘lose a lot of sleep’ over impact mon pol has on currency values
• Fisher: Thinks drop in headline US inflation is benign, “We don’t see deflation staring us in the face”
• Fed’s Rosengren: Highly accommodative policy currently appropriate
• Fed’s Raskin: Student debt is an important type of headwind for US econ that Fed is watching quite carefully
• Rosengren: Could argue that monetary policy is insufficiently accommodative-MNSI
• France’s Hollande: Wants EZ to be able to raise taxes & have own budget; EZ econ govt would harmonize fiscal policies & fight fraud; Ready to create European political union within two years
• Hollande: Current French pension system is unsustainable; French will have to work a bit longer
• Brazil’s Tombini: Econ grew at faster pace in Q1, estimates are for 3% growth in 2013; Inflation is & will remain under control; CB will do what is needed to ensure inflation declines in H2 of ‘13
Looking Ahead – Economic Data (GMT)
• 22:45 NZD Q1 PPI-Input q/q, no f/c prev -0.3%
• 22:45 NZD Q1 PPI-Output q/q, no f/c prev -0.1%
• 23:50 JPY March Machinery Orders m/m, f/c 2.8% prev 7.8%
• 23:50 JPY March Machinery Orders y/y, f/c -4.1% prev -11.3%
Looking Ahead – Events, Other Releases (GMT)
• JPY Prime Minister Abe gives speech at Japan Akademeia
EUR/USD Europe’s attempt to clear the May 15 low failed & the pair sat near 1.2865 at NY’s open. With USD/JPY buys subsiding, early NY saw EUR/USD firm. More USD softening came about as jobless claims & April CPI were below f/c. Weak shorts covered & a quick spike to 1.2920 ensued. Pullbacks were limited & more USD weakness hit on dismal Philly Fed data. 1.2930 was hit but Asian offers capped. Two headlines had the USD rally resume. European Industrial Commissioner Tajini said the EUR was too strong & the ECB should manage the ccy to help exports. Fed member Williams then stated the pace of QE could be slowed as early as this summer & possibly finished by year end if jobs improved. EUR/USD was hit hard & eventually hit 1.2869. A slight bounce had the pair near 1.2875 at the close. Bears are encouraged as today’s rally halts at old support (61.8% Fib) and daily RSI remains biased down. The Doji on the daily candle warrants a bit of caution though. It indicates indecision & a short squeeze can’t be ruled out. A break below 1.2840 & hold below the 76.4% Fib will embolden bears & a test of 1.2740 is likely thereafter.
USD/JPY While JPY GDP beat forecasts, the continued downtrends in Deflators and Capex may have been enough to help JGB yields back off ahead of tomorrow’s Y2.8tln MM add from the BOJ and expectations next week’s policy meeting will also focus on tamping down rates. Helping rates soften globally were today’s weaker-than-expected US economic reports. Tsy yields led the fall and kept USD/JPY ranging around 102. Japanese importers and real money remain buyers on dips by 101.80 and 101.50. Only TR/UofM Confidence & LEI from the US Friday; Machine Orders and Housing Loans from Japan tonight. Fed speakers remain discordant, seemingly powerless to attack building asset bubbles & taking BOJ’s easing as helping lift the global economy, though Tsy’s Brainard reminded that it was domestic Japanese growth that needs to rebound, not just exports. Offers at 102.75-80 are noted ahead of a bigger 103 KO defense (NY Fri cut). EUR/JPY remains well supported above 131.10 historicals and the 10-DMA by there. AUD/JPY is the standout loser v the yen, inside the daily Cloud for first time since Oct.
GBP/USD opened NYC 1.5210/15, roughly 20 pips lower than last night’s close; O/N range 1.5197/1.5248; Today’s NYC range 1.5209/1.5323, close 15270. Decent sized.1.5200 and 0.8450 (EUR/GBP) option expiries helped put a base on cable in the AM, soft US data snaps, CPI, Philly Fed, weekly claims torpedoed long US / short EU growth trades, stops were popped and we ran swiftly through them. Late headlines from SF Fed’s Williams that the FOMC may commence tapering QE bond purchases as early as the summer slammed GBP/USD back down to 1.5257 PM lows. The news also hit US equity marts which were already in the doldrums.
USD/CHF opened New York 0.9670, roughly 20 pips higher than last night’s close; O/N range 0.9664/0.9709; Today’s NYC range 0.9578/0.9678, close 0.9642 after a PM pop to 0.9659. The dollar took a belting after 32k pop in weekly job insurance claims, -0.4% CPI, soft Philly Fed & components. US equity marts were straddling par around noon, close the session -0.50/-0.18% (S&P x Nasdaq) VIX 13.06. The global session has been dominated by massive real money buying CHF past 3 days, volumes rising daily. Afternoon setback for the Franc was comment by SF Fed’s Williams that labour market improvement may mean Fed QE tapering starts early.
USD/CAD opened Noram marts 1.0205, roughly 40 pips higher than last night’s close; O/N range 1.0152/1.0206; Today’s Noram range 1.0152/1.0207, close 1.0185. It was a choppy day full of disappointing US data and somewhat disappointing Canadian Int’l Secs transactions data (+CAD1.2bn vs +5.0bn f/c) Low lights were US real wkly earnings flat; housing starts -16.5%, jobless claims +32k to 360k (rev +5k) Philly Fed -5.2 (+1.3 last). USD went offered across the board, CAD just followed despite negative connotations for CAD GDP. SF Fed’s Williams noted in PM Fed tapering could begin early as this summer, USD/CAD popped 35/40 pips, paid at 1.0198.
AUD/USD NY opened just off the o/n lows at 0.9805. Overnight comments from China’s Vice-Premier Gaoli had Europe extend the slide begun in Asia to clear the 0.9800 barrier &have the pair at NY opening levels. In a repeat of Wednesday’s action the USD softened early on. Jobless claims & April CPI came in soft & Fed tapering thoughts declined. AUD/USD rallied to 0.9867 then settled a bit. A soft Philly Fed hit the USD again & AUD/USD touched 0.9883. The USD firmed as USD/JPY bounced off 101.80/85 sup & European Ind. Comm. Tajani said EUR was too strong. AUD/USD slid from the highs & stayed heavy after Europe’s close. Fed’s Williams comment on possibly reducing the pace of asset buys this summer & ending them by year end fueled a USD rally. AUD/USD slipped & sat near 0.9810 into the close. Bears grow confident as price holds below the 200 WMA & 76.4% Fib (0.9827) while daily & weekly RSIs are bearish. Some caution should be taken by bears though. Volume on the slide this week has diminished & 2yr yield spread compression nears support (219bps). The danger of a short squeeze within the long-term down trend grows.
NZD/USD Action in NY for the pair mimicked its fellow Antipodean (AUD). The pair sat just below 0.8150 on the open& quickly spiked up to 0.8205 on the soft CPI & jobless data. A high of 0.8209 was set for NY after on much worse than f/c Philly Fed data. USD buying resumed on USD/JPY’s bounce off 101.80/85 & the Tajini comments on EUR being too strong. NZD/USD steadily slipped lower with the pace of the slide picking up on William’s comments on possible QE tapering. Price touched 0.8150, bounced slightly & sat near 0.8155 at the close. The break & hold below the 38.2% Fib of 0.7456-0.8676 & 55 week MA has bears feeling good. Bearish daily & weekly RSI add to their delight as do narrowing 2yr NZD-USD yield spreads. A deeper fall looks to be in order. Moderate support lies near 0.8110/15 (late Nov low) but large 0.8050/65 support (mid-Nov low, 50% Fib) is a prime target. If that is cleared a test of 0.7900 is likely.
LATAM BACEN chief Tombini put the market on notice that the central bank is monitoring the inflation rate close and will do “whatever it takes” to keep it under control H2 2013. He noted Q1 GDP above forecast, expects 2013 as a whole to come in at 3.0%. Says domestic demand should sustain economic growth despite a “challenging external environment”. USD/BRL traded 2.0220/2.0375 today, Tombini’s remarks giving the Real a lift, USD/BRL dropped a big fig but ran into offshore bids circa 2.0225, close 2.0280. USD/MXN opened NYC circa 12.2475, traded 12.2800 / 12.2100 / 12.2875, closing near the highs after SF Fed’s Williams noted Fed QE tapering could begin this summer (If labour improvements continue).
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