Market Roundup
- EUR/USD falls to 3 week low at 1.1062 fm 1.1153.
- USD/JPY hits highest since March 20 at 121.10 fm 120.58.
- Sterling rises after BOE minutes; GBP/USD hit day’s high at 1.5535.
- BOE minutes show MPC voted 9-0 in May to keep interest rates unchanged at 0.5%.
- BOE: Inflation close to zero unlikely to last long, expects notable pick up towards end 2015.
- Greece will not make IMF payment on June 5 without a deal- lawmaker.
- EU Moscovici- Important progress in Greece but still not here yet, pension/labour issues.
- Greek finmin- Schaeuble makes mistakes in his analysis of Greece (to Weekly DIE ZEIT).
- Fed Evans- Likely will not be appropriate to begin raising Fed funds until early 2016.
- Evans: FOMC should not raise rates until confidence that inflation 1-2yrs out will be 2% target.
- Germany April Producer prices 0.1% m/m, -1.5% y/y vs previous 0.1%/-1.7%. -1.4% expected.
- Switzerland May ZEW Investor sentiment -0.1 vs previous -23.2.
Economic Data Ahead
- (0700 ET/1100 GMT) MBA Weekly Mortgage Application Activity Indices.
- (1030 ET/1430 GMT) EIA Weekly Petroleum Statistics.
Key Events Ahead
- (0700 ET/1100 GMT) Day 1 (of 2) of FRB New York conference on mortgage contract design; New York.
- (1145 ET/1545 GMT) Fed Trade operation 30-year Fannie Mae / Freddie Mac (max $1.800 bln.
- (1400 ET/1800 GMT) FOMC Minutes.
FX Recap
EUR/USD broke 1.1100 levels and made a new intraday low at 1.1062 levels. It is currently trading around 1.1119 levels. The pair has broken intraday major support 1.1070 and this confirms short term weakness. Today Germany PPI data came with flat numbers. Ahead of the Fed minutes, the EUR traders would also keep an eye on the German-US benchmark 10-year bond yield spread. 1.1316 is an immediate resistance and a daily close below 1.1120 levels may drag the pair towards 1.1015 levels. Option expiries are at 1.1100 (398M), 1.1200 (392M).USD/JPY is trading higher at 120.87, having posted a daily high at 121.09 levels and low at 120.65 levels. USD/JPY remains lifted as markets continue to cheer notable US housing starts and building permits data released in the previous session which boosted the USD bulls. Moreover, better than forecasts Japanese GDP figures released this morning failed to lift the yen versus the US dollar, taking the pair higher towards 121 handle. On the top side, the next resistance is located at 121.60. Immediate support might be located at 119.80 levels. Option expiries are at 119.75 (840M), 120.00 (830M).GBP/USD recovered losses, trading around $1.5544. It made intraday high at 1.5558 and low at 1.5471 levels. UK released monetary policy meeting minutes in European session. The markets continue to absorb BOE MPC minutes which showed that that all nine MPC members voted unanimously in both cases. The minutes revealed that inflation will be picking up towards the end of the year. Immediate resistance is seen at 1.5632, above which gains could be extended to 1.5700 levels. On the other side, support is seen at 1.5392 levels. Option expiries are at 1.5690 (597M), 1.5600 (603M), 1.5450 (273M).USD/CHF is trading above 0.9350 levels and made intraday low at 0.9354 and high at 0.9404 levels. Today Switzerland ZEW economic sentiment data came at -0.1 against -23.2 previous released. Near term support is seen at 0.9335 levels and resistance is seen at 0.9412 levels.AUD/USD is supported around 0.7900 levels and trading at 0.7894 levels. It has made intraday high at 0.7934 levels and low at 0.7883 levels. The Westpac-Melbourne Institute Consumer Sentiment index jumped 6.4% to a 16-month high of 102.4 in May from 96.2 in April. Moreover, the Aussie remains boosted also as the greenback takes a breather in its rally following yesterday’s housing data that showed improving housing sector in the US. Meanwhile, traders now shift their focus towards FOMC minutes release later today. Initial support is seen at 0.7860 and resistance at 0.7976 levels. Option expiry is at 0.7900 (363M).
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