News of another earthquake in Christchurch emerged which knocked the NZDUSD back some 60 points and EUR eased back to mid-range. Later, reports of a second quake sent the NZD down to 10-day lows. Elsewhere currencies were steady.
With an Australian holiday to kick-start the week, Asian markets were perhaps expecting a relatively quiet session. At the open we had a quick push sub-1.43 in EURUSD to test for stops but once momentum failed to accelerate we squeezed back to the 1.4350 resistance level. Data releases were thin on the ground in Asia and are non-existent in Europe and the US with a holiday in certain European centres perhaps taking its toll on activity. We have speeches from ECB’s Trichet and Fed’s Lacker to hopefully liven up proceedings (though maybe not) and a late speech from BOE’s Weale though markets will no doubt be on “Greece Watch”.
EU ministers meet tomorrow ahead of the defining Jun 20 EcoFin meeting, striving to thrash out a “solution” to the Greek situation without stirring up a credit event. Other highlights this week include a speech from Bernanke late Tuesday, CPI Wednesday and the first of the regional manufacturing surveys with empire manufacturing followed by the Philly Fed on Thursday. UK CPI on Tuesday will be interesting for the BOE while the SNB meets on Thursday.
In Friday's session, more uncertainties regarding the Greek bailout situation kept risk aversion to the forefront. The ECB repeated its hard-line against any debt extension that was not fully voluntary as EU ministers struggled to fashion a bailout that would not trigger a so-called credit event. Unimpressive data from around the globe compounded the “risk-off” theme and the USD index rallied to its highest level since the start of the month. GBP also suffered after some very poor industrial and manufacturing production while Sweden saw an ugly miss on its industrial production numbers too.
There was no real US data of note as import prices were higher than expected and Wall St closed out the week with its sixth week of straight losses. Better headline Canadian employment data gave the CAD a brief lift but the weight of global slowdown fears soon saw it reversing those gains. The US bond rally stuttered into the weekend enabling USDJPY to stay above the key 80.0 level.
Economic Data Highlights
- CA May Unemployment Rate out at 7.4% vs. 7.6% expected and 7.6% prior
- CA May Net Change in Employment out at 22.3k vs. 20.0k expected and 58.3k prior
- US May Import Price Index out at +0.2% m/m, +12.5% y/y vs. -0.7%/11.2% expected and revised 2.1%/11.4% prior resp.
- UK May NIESR GDP Estimate out at +0.4% q/q vs. revised +0.1% prior
- US May Monthly Budget out at -$57.6b vs. -$59.0b expected and -$135.9b prior
- JP Apr. Machine Orders out at -3.3% m/m, -0.2% y/y vs. 1.7%/4.9% expected and 1.0%/9.1% prior resp.
- China May M1 Money Supply out at +12.7% y/y vs. 13.7% expected and 12.9% prior
- NZ May REINZ Housing Price Index out at -1.8% m/m vs. +1.1% prior
- NZ May REINZ House Sales out at +10.8% y/y vs. -4.2% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
- EU ECB’s Trichet to speak (1300)
- US Fed’s Lacker to speak (1330)
- UK BOE’s Weale to speak (1800)