Aud/usd Parity On March
RBA Cuts But RBNZ To Stay Put
At its meeting overnight the Reserve Bank of Australia (RBA) cut its cash target rate by 25bp to 2.75% in accordance with market pricing and our call but contrary to most analysts' expectations; AUD plunged on release. The RBA has for a while now been in wait-and-see mode looking for past rate cuts to work their effects the economy but weaker domestic data, a softer China, and a large-scale sell-off in commodities appear to have convinced governor Stevens and co that time is ripe of a continuation of the easing cycle.
Notably the RBA notes the continued strength of Aussie - a key issue for the non-resource sector. We look for at least one more 25bp cut from the RBA in H2 and for AUD to head more consistently below parity. In the near term, we think AUD/USD ...
Appetite for risk returns after €100B deal for Spanish banks, EU moves closer to fiscal union and OK China data is released for May
Economic Data
(CN) CHINA MAY TRADE BALANCE: $18.7B V $16.2BE; Exports Y/Y: 15.3% v 7.2%e; Imports Y/Y: 12.7% v 5.5%e
(CN) CHINA MAY INDUSTRIAL PRODUCTION Y/Y: 9.6% V 9.8%E; YTD Y/Y: 10.7% V 10.8%E
(CN) CHINA MAY RETAIL SALES Y/Y: 13.8% V 14.2%E; YTD Y/Y: 14.5% V 14.6%E
(CN) CHINA MAY CONSUMER PRICE INDEX (CPI) Y/Y: 3.0% V 3.2%E (lowest level since May 2010); -0.3% M/M
(CN) CHINA MAY PRODUCER PRICE INDEX (PPI) Y/Y: -1.4% V -1.2%E
(CN) CHINA MAY FIXED ASSETS URBAN INVESTMENT YTD Y/Y: 20.1% V 20.0%E
(NZ) NEW ZEALAND Q1 MANUFACTURING ACTIVITY VOLUME Q/Q: 0.7% V 1.3% PRIOR; MANUFACTURING ACTIVITY Q/Q: -1.8% V 0.9% PRIOR
(JP) JAPAN MAY CONSUMER CONFIDENCE: ...
Fundamental Analysis
EUR
German bunds rose on worries that European leaders will struggle to resolve the euro zone debt crisis during tonight's European summit. David Schnautz of Commerzbank AG in London thinks that Europe is unlikely to solve key topics and will probably disappoint the market. The 5-year bund lost 5 bp to 0.47 percent at 10:49 GMT after tumbling to 0.461 percent, the lowest since 1990, when Bloomberg began gathering data.
USD
Crude oil futures declined in Asian session on Wednesday as Iran is ready to invite nuclear inspectors, the move that may ease oil import sanctions. Light, sweet crude oil futures for July delivery traded at 91.27 US Dollars per barrel, retreating by 0.63% from the last session's high of 91.72 US Dollars per barrel.
GBP
Today the minutes of the ...
Fundamental Analysis
EUR
"The rally is mostly technically driven after we became quite oversold last week."
- Raimund Saxinger, a fund manager at Trust Investment GmbH
European stocks rose by the most in a month on Tuesday. The Stoxx Europe 600 Index gained 1.91 per cent to 244.76. Germany’s DAX Index edged higher 1.65 per cent and France’s CAC 40 Index added 1.88 per cent. The U.K.’s FTSE 100 Index rose 1.86 per cent to 5,403.28
USD
"People are becoming more confident about job prospects and about taking on mortgages."
- Millan Mulraine, a senior U.S. strategist at TD Securities Inc.
U.S. existing home sales rose in April to an annual rate of 4.62 million from 4.47 million in March, said the National Association of Realtors.
GBP
"These figures give the Monetary Policy Committee ...
Yen gains after BOJ stands pat; World Bank cuts China outlook, April lending looks weak; EUR falls on Papademos "grexit" mention
Economic Data
(JP) BANK OF JAPAN (BOJ) LEAVES TARGET RATE RANGE UNCHANGED BETWEEN 0.0% TO 0.10% (AS EXPECTED); Keeps economic assessment unchanged; Maintains asset purchase fund at ¥70T
(JP) JAPAN APR MERCHANDISE TRADE BALANCE TOTAL: -¥520B V -¥471BE; ADJUSTED: -¥480B V -¥617BE
(US) NORTH AMERICA SEMI EQUIPMENT INDUSTRY APR SALES BOOK TO BILL RATIO: 1.10 V 1.13 PRIOR (3RD CONSECUTIVE MONTH ABOVE PARITY, 1st decline in 7 months)
(AU) AUSTRALIA APR DEWR INTERNET SKILLED VACANCIES M/M: -0.8% V -0.5% PRIOR (4-month low)
(AU) AUSTRALIA MAR WESTPAC LEADING INDEX M/M: 0.4% V 0.0% PRIOR
(AU) AUSTRALIA MAR CONFERENCE BOARD LEADING INDEX M/M: +0.2% V 0.0% PRIOR
(SG) ...
Fundamental Analysis
EUR
Gold extended previous gains in Asian session on Tuesday as concerns over Greek exit from the single currency union eased. At G8 summit leaders of eighth largest economies stated that they would do everything possible to retain Greece in the Euro Zone. COMEX gold June contract traded at 1,592.35 US Dollars per troy ounce on the New York Mercantile Exchange, advancing by 0.23%.
USD
The US Senate has passed a bill aimed at tightening sanctions imposed on Iran to force the country to cease its nuclear program. The new sanctions imply investigation of role of Iran's Revolutionary Guard in oil exports as well as obliging the US companies to disclose any business activities with Iranian partners. The move came ahead of negotiations between Iran and six major ...
Fundamental Analysis
EUR
"Inevitably there is going to be an element of bargain hunting as investors look to top up their holdings on the basis of slightly lower prices"
- Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers
European stocks edged higher on Monday on China’s pledge to boost growth.
USD
"Equity prices have gotten oversold"
- Mark Luschini, chief investment strategist for Janney Montgomery Scott LLC
U.S. equity market edged higher on Monday on China stimulus hopes and after German and French officials said they would cooperate to keep Greece in the monetary union.
GBP
"Obviously, as the euro depreciates, the U.K. gets slightly more expensive"
- Miles Shipside, Rightmove commercial director
U.K. national house prices stagnated in March, announced the ...
Fundamental Analysis
EUR
"Fears of a Greek exit from the euro zone and the negative consequences from that are prevailing"
- Ben Kwong, KGI Asia
European stocks edged lower after Fitch downgraded Greece’s credit rating to ‘CCC’, implying that the country is vulnerable and highly dependent on favourable economic conditions to fulfill its financial obligations.
USD
"If there were scope to do another twist of some type it would be prudent to consider it, especially in the scenario where things are worse and the Fed feels like it needs to move"
- Nathan Sheets, Citigroup Inc.
Fed policymakers might potentially launch another round of Operation Twist rather than a direct asset purchases in case of increased risks or further weakening of the US economy.
GBP
"We must work together to give ...
Dukascopy Fundamental Analysis
EUR
Moody's reduced credit rating of 16 Span's banks, citing a rise in bad debts in the country's financial sector and overall deterioration of the economic environment. The decision came after shares of Bankia lost another 14%. The largest banks such as Banco Santander and BBVA were downgraded while ten out of 17 banks were put on negative watch, implying that further credit rating cuts are possible.
USD
As the U.S. dollar gets stronger, investors are concerned that aggravating debt crisis in Europe will reduce demand for oil. Therefore, oil shows decline for a third week. Crude oil lost 25 cents yesterday and reached the 6-month low of $92.56. Brent oil for July delivery slid 0.5 percent to finish at $106.99.
GBP
Following a downgrade of 16 Spanish banks, ...