- USD remains weak on the steepening treasury yield curve. Long end is unloved, pushing up yields, and showing diminishing long term confidence in the USD by China and Japan.
- Timothy Geithner spoke in China, reiterating the strong USD policy and saying that Chinese interests in USD-denominated assets were very safe.
- South Korean imports and exports both fall more than expected in May.
- South Korean May CPI grew at 2.7% from a year earlier, the lowest rate in 20 months
- China’s May PMI 53.1, down from 53.4 in April
- Australian April retail sales +0.3%, business inventories -1.2%
- Australian manufacturing index + 7.4 points in May
- GM expected to file for bankruptcy before start of business later in NY
- Regional stock markets gained on average 1.5% despite the GM news and Shanghai galloped ahead over 3% up in early trade.
It has been a relatively quiet day in Asia with most of the major pairings returning to their NY closing levels. EUR/USD made its high for the day at 1.4165 in early interbank trade. The pair drifted lower throughout the morning and came under pressure as EUR/JPY was aggressivley sold into the Tokyo fix. EUR/JPY triggered stops under 134.20, falling to a low of 133.88, and EUR/USD fell below 1.4100 brifely before recovering. Strong bids were noted in the USD/JPY when it fell to its low around 94.70.
Ranges: EUR/USD 1.4097/1.4165, USD/JPY 96.68/95.50, EUR/JPY 133.88/134.82, cable 1.6164/1.6244, AUD/USD .7992/.8065.
Markets: Nikkei +1.8%, Shanghai +3.3%, HK +2.6%, Kospi +1.0%. Gold +$4 at $985/oz. Oil steady at $66/bbl.
