Thread: Daily FX Market Outlook by AceTrader-3-5-2011

Market Review - 2/05/2011 19:57 GMT

Euro falls from a 17-month high in late New York as metal prices tumble

Euro retreated sharply from a 17-month high in late New York trading on Monday due to profit-taking together with another wave of heavy selling in commodities especially in spot gold and silver.

Earlier in Asian midday, the single currency fell sharply from 1.4864 to an intra-day low of 1.4762 after U.S. President Barack Obama said al-Qaeda leader Osama bin Laden had been killed by the U.S. military in Pakistan. However, the single currency rebounded in thin Europe session (London was closed for May Day holiday) due to the better-than-expected German and eurozone Manufacturing PMI data, fueling speculation that overall growth in the region would prompt the ECB to keep raising interest rates. Later, the euro climbed above last week's top of 1.4882 to a 17-month high of 1.4903 in New York moring due to hawkish remarks from Eurogroup chief Jean-Claude Juncker before retreating in late New York trading.

Eurogroup head Jean-Claude Juncker was quoted as saying that strength of euro is not giving rise to concern and is mainly due to dollar's weakness. He added inflation developments in euro area are of some concern. Juncker also said euro area would give a full fledged answer to Portugal situation by mid-May and restructuring Greek debt was not an option.

German manufacturing PMI rose to 62.0 in April versus economists' forecast of 61.7 and the previous reading of 61.7 in March. Eurozone Markit final manufacturing PMI also rose to 58.0, against the expectation of 57.7, suggesting factories continued to ramp up their prices.

The British pound tracked euro's intra-day movement closely. Despite falling swiftly from an intra-day high of 1.6739 to 1.6644, cable then edged higher in European session, however, the pound's upside was limited to 1.6720/22 and price later declined to a day's low of 1.6642 in late New York session in tandem with the single currency. Cross-selling in sterling versus the euro also weighed on the pound as eur/gbp strengthened from 0.8857 to as high as 0.8920.

The dollar resumed its recent decline against the Japanese yen to 81.00 in Asian morning, however, the pair then rebounded strongly to 81.68 after news of Bin Laden's death. Later, renewed selling interest capped intra-day rebound and price later ratcheted lower again in New York morning before staging another recovery.

Spot gold price tumbled sharply from around 1575.00/oz to 1542.30/oz in late New York session after early resumption of LT uptrend to a fresh record high of 1575.70 in Australian session while spot silver price also tanked from 47.31 to 43.73 in late New York trading.

Data to be released on Tuesday include:

Tuesday will be a holiday in Japan.

China Non-manufacturing PMI; U.K. Halifax hse prices, manufacturing PMI and CBI distribution trade; EU PPI; U.S. durable goods (revised) and factory orders.

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Market Review - 03/05/2011 20:02 GMT

Euro little changed against the dollar after Portugal reached an agreement with EU and IMF

Euro showed little reaction against the dollar on Tuesday after Portugal reached an agreement with European Union (EU) and International Monetary Fund (IMF) on a three-year bailout loan. Earlier in the day, the single currency was under selling pressure following the sharp retreat from Monday's 17-month high of 1.4903 and although renewed selling interest at 1.4845 pushed price to an intra-day low of 1.4755 in European morning, euro rallied from there and eventually climbed to 1.4890 in New York morning before retreating again.

Portugal's Prime Minister Jose Socrates was quoted as saying that 'Portugal reached an agreement with EU/IMF on bailout loan; still need final talks on bailout with opposition parties; EU/IMF bailout is for 3 years; bailout plan gives more time to meet budget deficit targets'.

The British pound tanked against the dollar and the euro as the worse-than-expected manufacturing data fueled speculation that the Bank of England would maintain its key lending rates at a record low later this week. Despite cable's brief recovery from 1.6585 to 1.6648, price then tumbled sharply to 1.6467 in European midday before staging a strong recovery in tandem with eur/usd to 1.6550. However, selling interest there limited the pound's upside and cable ratcheted lower to a day's low 1.6464 in late New York session. Eur/gbp rallied above 0.8942 (October 2010) to as high as 0.9007 in New York morning before trading sideways.

U.K. April CIPS manufacturing PMI came in at 54.6, its slowest pace in 7 months, versus economists' expectation of 57.0 and downwardly revised reading of 56.7 in March.

The Japanese yen and the Swiss franc strengthened against most of their counterparts as selloff in equities and commodity prices prompted investors to flock toward these 'safe haven' currencies. Despite the usd/chf pair's strong recovery to 0.8674 after resumption of recent descent to a low of 0.8619 in European morning, selling interest there pushed price lower again and the pair eventually dropped to a fresh lifetime low of 0.8595 in New York morning before trading sideways. Eur/chf also tumbled from 1.2839 to 1.2762. The dollar also extended recent decline against the Japanese yen to an intra-day low of 80.70 before staging a recovery while eur/jpy, aud/jpy and gbp/jpy tumbled from 120.59 to 119.21, from 88.95 to 87.58 and from 135.38 to 132.97 respectively.

Data to be released on Wednesday include:

U.K. Nationwide house prices; German services PMI; EU services PMI and retail sales; U.K. mortgage approval and PMI construction; U.S. ADP employment and ISM non-manufacturing.

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Market Review - 04/05/2011 20:16 GMT

Euro falls from a 17-month high as metal prices tumble

Euro retreated strongly from a fresh 17-month high in New York morning as the selloff in U.S. stocks, precious metals and commodity prices dented risk appetite.

Earlier in the session, despite euro's brief but sharp fall to an intra-day low of 1.4775 in Asian morning, the single currency managed to ratchet higher in European morning. Although price rallied above Monday's top of 1.4903 easily in New York morning after release of lower-than-expected U.S. ADP Employment data and climbed to a fresh 17-month high of 1.4940 following the much weaker-than-expected U.S. ISM non-manufacturing PMI data, profit-taking offers there capped the single currency's upside and price later fell swiftly to 1.4806/10 in New York afternoon session.

U.S. April ADP Employment came in at 179,000 versus economists' forecast of 198,000 with upwardly revised reading of 207,000 from 201,000 in March. U.S. April ISM non-manufacturing PMI came in at 52.8 versus economists' forecast of 57.4 and previous reading of 57.3.

Spot silver price tumbled sharply from 42.25/oz to 39.01/oz, suffering the worst one-day drop in three decades after Wall Street Journal (WSJ) reported that George Soros's big hedge fund and some other leading firms have been selling gold and silver according to people close to the matter. Spot gold price also tumbled from 1541.30/oz to as low as 1506.10/oz.

The British pound tracked euro's intra-day movement closely. Despite cable's brief breach of previous session's low of 1.6464 after meeting renewed selling at 1.6494 in Australian trading session, buying interest at 1.6453 limited downside and intra-day firmness in euro lifted price to as high as 1.6575 in New York session before falling sharply back to 1.6480/82.

The Japanese yen and the Swiss franc strengthened across the board on safe-haven demands. Despite the dollar's recovery against the Japanese yen from Asian low of 80.82 to 81.19 in European midday, price then tanked to 80.51 after the release of a slew of worse-than-expected U.S. economic data, usd/jpy eventually fell to 80.44, the lowest level since the Group of Seven jointly intervened in the foreign exchange markets to weaken the Japanese yen on March 18. Eur/jpy, aud/jpy, gbp/jpy also fell sharply from 120.83 to 119.27, from 88.15 to 86.44 and from 134.24 to 132.79 respectively. The usd/chf pair posted another fresh all-time low of 0.8554 before staging a recovery on short-covering. Eur/chf tumbled from 1.2830 to as low as 1.2730.

Federal Reserve Bank of Boston President Eric Rosengren said that current accommodative policy stance was appropriate given the state of economy and impact of current oil, food supply shocks on inflation should be transitory.

European Commission stated that press conference on Portugal bailout was scheduled for Thursday at 10:00 GMT.

Data to be released on Thursday include:

New Zealand unemployment rate and employment change; Australian retail sales and building approvals; U.K. services PMI, BOE rate decision and BOE asset purchase target; German factory orders ; ECB rate decision and press conference; Canadian building permits and Ivey PMI; U.S. jobless claims, productivity and labour cost.

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Market Review - 05/05/2011 20:26 GMT

Euro tumbles sharply as ECB's Trichet signals ECB will not raise rates in June
The single currency tanked broadly on Thursday after European Central Bank President Jean-Claude Trichet surprised the market by stating clearly at the press conference after the central bank kept its benchmark interest rates unchanged at 1.25% that the European Central Bank would not raise interest rates at the June meeting.

Trichet was also quoted as saying that 'current monetary policy is very accommodative; underlying pace of monetary expansion remains moderate; rates remain low; inflation likely to stay clearly above 2% on coming months; inflation expectations must remain firmly anchored; can hike rates as appropriate'.

Despite staging a strong rebound from Asian low of 1.4807 to an intra-day high of 1.4900 in European morning following the selloff from a 17-month high of 1.4940 in the previous session, the euro fell sharply to 1.4818 after the release of much worse-than-expected German industrial order data. Later, the single currency plunged sharply to 1.4577 in New York morning as Trichet's comments were less hawkish than the market had anticipated and price remained under heavy selling pressure in New York afternoon session, the single currency eventually dropped to an intra-day low of 1.4510 before stabilising in late New York trading. Eur/jpy, eur/gbp, and eur/chf tumbled from 119.76 to 116.15, from 0.9043 to 0.8865 and from 1.2796 to 1.2630 respectively.

German industrial order fell unexpectedly by -4.0% in March versus the economists' forecast of 0.1% with downwardly revised reading of 1.9% in February.

The British pound also weakened against the dollar in another volatile trading session. Despite falling sharply from Asian high of 1.6544 to 1.6446 after the release of much weaker-than-expected U.K. CIPS services PMI data which came in at 54.3 versus economists' forecast of 55.7, cable managed to recover in European midday. However, intra-day selloff in euro dragged the pound lower and price pierced through said support easily in New York morning to as low as 1.6405 in New York midday. Later, another wave of selling interest emerged in late New York session and cable eventually fell to an intra-day low of 1.6357 before staging a recovery.

Bank of England (BOE) kept key interest rates unchanged at 0.5% as expected and maintained its asset purchase target at 200 billion pounds.

The Australian dollar, the New Zealand dollar and the Canadian dollar, known as three commodity-linked currencies, tumbled against the greenback as oil and precious metal prices sank. U.S. crude oil price tanked 8.6% and closed below $100 per barrel as U.S. weekly jobless claims last week jumped to an eight-month high, fanning worries about the strength of the global economic recovery. Spot gold price tumbled from $1521.30/oz to $1464.30/oz while spot silver price continued to nose dive from $39.77/oz to as low as $34.37/oz. Aud/usd and nzd/usd tanked from 1.0771 to 1.0537 and from 0.7943 to 0.7816 respectively while usd/cad rallied from 0.9568 to 0.9713.

U.S. weekly jobless claims came in at 474,000 versus the economists' forecast of 410,000.

Data to be released on Friday include:

Swiss unemployment rate; U.K. input and output PPI; German industrial production; Canadian employment change and unemployment rate; U.S. average hourly earnings, non-farm payrolls, private payrolls and unemployment rate.

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Market Review - 06/05/2011 20:13 GMT

Euro tumbles after German magazine reports that Greece may exit eurozone
Euro tanked broadly again on Friday in New York midday after German Der Spiegel magazine reported that Greece Government raised the possibility of leaving eurozone and was considering to reintroduce its own currency. Later, eurozone officials including Eurogroup Chairman Jean-Claude Juncker, Austrian Finance Minister spokesman, French Finance Ministry official and Slovak Finance Minister Miklos came out and tried to comfort market by saying that the report was not valid. A Greek official also denied that Greece was considering the idea of leaving the eurozone.

Reuters news report citing source from German coalition source confirmed 'there is crisis meeting in Luxembourg with German Finance Minister Wolfgang Schaeuble and Deputy Finance Minister Joerg Asmussen taking part.'

Latest news from Reuters at 21:40 GMT quoted comments from Eurogroup chairman Jean-Claude Juncker who said that 'Luxembourg didn't discuss Greece leaving Eurozone or Greek debt restructuring; Luxembourg meeting was attended by Germany, France, Italy and Spain.'

Earlier in the session, although the euro managed to stage a recovery in Asian morning following the sharp selloff in the previous session due to mildly dovish comments from European Central Bank President Jean-Claude Trichet, renewed selling at 1.4588 capped the euro's upside and price ratcheted lower in European trading session. Despite the single currency's knee-jerk reaction after the release of mixed U.S. jobs data, price fell to a low of 1.4457 before staging a rebound in New York morning. However, the euro tumbled to as low as 1.4310 in late New York session on speculation that Greece may stop using the shared currency. Eur/jpy, eur/gbp, eur/chf also tanked from 117.60 to 115.23, from 0.8899 to 0.8745 and from 1.2748 to 1.2575 respectively.

The British pound was little changed against the dollar but rallied against the euro. Despite cable's brief breach of previous session's low of 1.6357 after meeting renewed selling at 1.6434 in Asian morning, price then rebounded strongly from 1.6355 after the release of higher-than-expected U.K. core PPI data which came in at 0.6% m/m and 3.4% y/y versus economists' forecast of 0.3% m/m and 3.0% y/y respectively and despite rising to an intra-day high of 1.6464 in New York morning, the pound then retreated in tandem with the single currency in late New York session but cable's downside was limited due to active cross-buying in sterling versus the euro.

U.S. jobs report showed 244,000 jobs were created in the U.S. economy in April, the figure was higher than market's forecast of 186,000, however, unemployment rate rose to 9.0% versus forecast of 8.8%. Private payrolls number, however, climbed to 268,000 versus forecast of 200,000, this was the largest increase since February 2006.

Data to be released next week include:

Germany export and import and trade balance; EU Sentix investor confidence; Canadian housing starts on Monday.

U.K. BRC retail sales and RICS house prices; Australian trade balance and NAB business confidence; China trade balance and imports and exports; Swiss CPI; U.S. export and import price indicies and wholesale inventories on Tuesday.

China consumer price index, industrial production, retail sales and fixed assets investment urban YTD; Japan leading indicators; Germany CPI and HICP final; U.K. trade balance; Canadian exports and imports and trade balance; U.S. Fed budget on Wednesday.

Japan current account and economic watch DI; German wholesale price index; U.K. industrial and manufacturing production; EU industrial production; Canadian new housing price index; U.S. jobless claims, PPI, retail sales and business inventories on Thursday.

German GDP; Swiss combined PPI; EU GDP; U.S. CPI, real earnings and University of Michigan survey final on Friday.

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Market Review - 10/05/2011 20:36 GMT

Euro posts moderate gains on Greece's potential new financial aid

Euro swung between gains and losses on Tuesday driven by conflicting reports about a potential new deal for Greece and lots of remarks from European Union officials.

Although renewed selling at 1.4378 in Australian session capped Monday's strong rebound from 1.4254, the euro retreated briefly after comments from European Central Bank Governing Council member Ewald Nowotny who said that international community had underestimated Greece's problems and price then fell further to a day's low of 1.4270 in European morning following the euro-bearish comments from European Central Bank Executive Board member Lorenzo Bini Smaghi. However, the single currency later rebounded strongly due to a Dow Jones report which quoted comments from a senior Greek official that Greece could clinch a new financial aid totaling 60 billion euros as soon as in June, which was later denied by Greek Finance Minister George Papaconstantinou. Euro eventually climbed to an intra-day high of 1.4412 in late New York trading.

European Central Bank Executive Board member Lorenzo Bini Smaghi said that 'restructuring of Greek debt would bring banking system to its knees; Greek disaster would be contagious for whole eurozone; Greek exit from eurozone would damage Greece but also other countries'.

Another European Central Bank Governing Council member Yves Mersch said that 'Europe must take strong steps to ensure confidence that it respects the basic principles of market economy, which ruled out any question of not repaying debt; debt restructuring for Greece not an option'.

The British pound fell against the dollar and the euro on speculation that the Bank of England will lower its economic growth forecasts in its inflation report on Wednesday. Cable ratcheted lower from 1.6422 in Asian and European sessions before staging an euro-led rebound from an intra-day low of 1.6317 in New York midday. Eur/gbp rebounded from 0.8721 to 0.8808.

U.K. Chancellor George Osborne made a statement in a question and answer session in the Parliament that fiscal strategy gave Bank of England freedom to keep rates lower for longer and his comments pressured sterling in New York morning.

Elsewhere in the market, the Swiss franc fell sharply versus the greenback and the euro after the release of lower-than-expected Swiss inflation data. Usd/chf rose briefly above last week's high of 0.8800 to a high of 0.8806 in European morning and although usd/chf traded sideways in European midday, buying interest around 0.8755 limited downside and price then extended upmove from last week's lifetime of 0.8554 to an intra-day high of 0.8824 in New York midday. Eur/chf also rallied from 1.2490 to 1.2687.

Data to be released on Wednesday include:

China consumer price index, industrial production, retail sales and fixed assets investment urban YTD; Japan leading indicators; Germany CPI and HICP final; U.K. trade balance; Canadian exports and imports and trade balance; U.S. trade balance and Fed budget.

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Market Review - 11/05/2011 20:37 GMT

The euro tumbles broadly on renewed concerns over financial aid to Greece
The single currency tanked on Wednesday due to uncertainty over European leader's willingness to offer more financial aid to Greece, fueling speculation that the country will eventually need to restructure its debt. In addition, the sharp selloff in commodity prices also weighed on the euro.

The euro traded sideways in Asian session and despite a brief rise to an intra-day high of 1.4423 in European morning, price then ratcheted lower in European session. Later, the selloff in U.S. stocks and commodities pressured the single currency even lower in New York morning and intra-day decline accelerated after the breach of Monday's 1.4254 support. The euro eventually extended recent fall from last week's 17-month high of 1.4940 to as low as 1.4172 in New York midday before staging a moderate recovery.

The British pound was little changed against the dollar but tumbled against the euro after the Bank of England raised its inflation forecasts, boosting speculation that the Bank of England will raise interest rates from the present record low of 0.5% by the end of this year. Cable jumped from European low of 1.6345 to as high as 1.6518 following the hawkish Bank of England inflation report. However, intra-day selloff in the euro dragged the pound lower and price fell sharply to a day's low of 1.6322 in New York midday. Active cross-buying in sterling versus the euro cushioned cable's downside, as eur/gbp tanked from 0.8812 to 0.8679.

Bank of England Governor Mervyn King said at the press conference after the release of Bank of England quarterly inflation report that 'we are very likely to raise bank rate rather than sell assets as our first tightening move'. His comments also supported the British pound earlier.

The Japanese yen also benefited from its safe-haven appeal and rose against most of its counterparts. Eur/jpy, aud/jpy, gbp/jpy tumbled from 116.88 to 114.57, from 88.10 to 86.13 and from 134.05 to 131.84 respectively.

On the data front, German April final CPI came in at 0.2% m/m n 2.4% y/y as expected. U.K. March trade deficit came in at 7.66 billion pounds versus economists' forecast of 7.25 billion. U.S. March trade balance came in at - US$48.18 billion versus economists' forecast of - US$47.00 billion. U.S. April Fed budget came in at - US$40.49 billion versus economists' forecast of - US$62.00 billion.

Data to be released on Thursday include:

Japan current account and economic watch DI; German wholesale price index; U.K. industrial and manufacturing production; EU industrial production; Canadian new housing price index; U.S. jobless claims, PPI, retail sales and business inventories.

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Market Review - 12/05/2011 20:51 GMT

Euro pares early losses in New York as commodity prices rebound strongly

Euro rebounded strongly from a near six-week low on Thursday as commodity prices recouped initial sharp losses. In addition, the single currency was also supported by widening interest rate differentials as the European Central Bank is expected to raise interest rates further later this year after European Central Bank policymaker Luc Coene was quoted as saying that April's interest rate hike was 'certainly' not a one-off.

Earlier in the session, despite euro's initial sideways trading in Asian session following the sharp selloff from 1.4423 to 1.4172 in the previous session, price then pierced through said support easily and extended recent descent to a near six-week low of 1.4123 in European morning. However, the single currency later managed to rebound in tandem with commodity prices in New York morning due to the hawkish remarks from ECB policymaker Luc Coene and euro eventually rose to an intra-day high of 1.4277 before easing. Cross-buying in euro versus the Japanese yen and sterling also lifted the single currency as eur/jpy and eur/gbp rebounded strongly from 114.18 to 115.56 and from 0.8674 to 0.8753 respectively.

Sterling tanked broadly in European morning after the release of worse-than-expected U.K. industrial production data and although cable extended its recent decline to a day's low of 1.6235 in European morning, price also staged a recovery to 1.6322 in New York midday on dollar's broad-based weakness.

Elsewhere in the market, the Australian dollar, the New Zealand dollar and the Canadian dollar, known as three commodity-linked currencies, also benefited from the rise in commodity prices. Aud/usd and nzd/usd rebounded from 1.0567 to 1.0698 and from 0.7841 to 0.7991 respectively whilst usd/cad retreated from 0.9695 to 0.9611. Spot gold and silver prices rebounded strongly from 1479.10 to 1507.80 and from 32.38 to 35.88 respectively.

China's central bank increased the reserve requirement ratio for its commercial banks by another 50 basis point to a record high of 21%.

U.K. March M/M industrial production came in at 0.3% versus street forecast of 0.8%.

Data to be released on Friday include:

German GDP; Swiss combined PPI; EU GDP; U.S. CPI, real earnings and University of Michigan survey final.

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Market Review - 13/05/2011 20:12 GMT

U.S. dollar rallies on broad-based risk aversion on Friday

The single currency went through a roller-coaster session in volatile trading on Friday. Although euro weakened in Asian morning to 1.4185 as crude oil price retreated by 1%, buying interest by sovereign names at 1.4180-90 lifted price and euro rallied broadly versus usd, Japanese yen, sterling and Swiss franc at European opening after the release of stronger-than-expected German GDP data, however, the pair eased from 1.4340 on reports of heavy offers by a major Swiss name and retreated in European midday.

Despite staging a brief bounce back to 1.4307 in New York morning on short-covering after release of U.S. CPI data, renewed selling quickly emerged and pushed the pair lower partly due to the Standard & Poor's report which said the ratings agency believed most Portuguese banks would need to take decisive actions to be able to comply with the new minimum core capital requirements by the Bank of Portugal. Euro's decline accelerated and later tumbled near European closing, price easily penetrated Thursday's near 6-month low of 1.4123 to as low as 1.4065 in New York midday on renewed concern that Greece would need to restructure its debts, intra-day decline U.S. stocks and commodity prices triggered a wave of risk aversion.

Cable rebounded initially from Asian morning low of 1.6240 to 1.6308 in Europe but sterling then fell broadly versus usd, yen and euro. Sterling was under pressure after the Institute for Fiscal Studies said U.K. living standards would fall as inflation outstripped income growth and government spending cuts crimped welfare payments. The pound later tanked in tandem with euro in NY trading and pierced through Thursday's low of 1.6235 to 1.6147 before staging a minor recovery in New York afternoon.

The yen strengthened against most of its major counterparts, boosted by speculation that Tokyo Electric Power Co. was repatriating overseas funds to pay for damages and compensation in the wake of this year's nuclear power-plant disaster. The eur/jpy, aud/jpy, and gbp/jpy fell sharply from 115.47 to 113.51, from 86.47 to 84.90 and from 131.59 to 130.30 respectively in New York midday after the release of U.S. CPI data and Standard & Poor's report in New York morning.

The 3 commodity currencies aud/usd, nzd/usd and usd/cad also tumbled from 1.0708 to 1.0520, from 0.7945 to 0.7836 and 0.9605 to 0.9745 respectively whilst usd/cad rallied from 0.9610 to 0.9745 in New York midday due to broad-based dollar's strength. Risk reduction on Friday also pressured gold and silver prices. Spot gold price tumbled from intra-day high of 1516.40 to as low as 1483.20 and spot silver price tumbled from as high as 36.43 to intra-day low of 33.96 in New York midday.

On the data front, German 2011 Q1 GDP came in at 1.5% q/q and 5.2% y/y versus economists' expectations of 0.9% q/q and 4.2% y/y and previous reading of 0.4% q/q and seasonal adjusted of 3.8% y/y in Q4 2010. Eurozone 2011 Q1 GDP came in at 0.8% q/q and 2.5% y/y versus economists' forecast of 0.6% q/q and 2.2% y/y and previous reading of 0.3% q/q and 2.0% y/y. U.S. consumer prices rose in April in line with economists' forecasts. The M/M CPI excluding food and energy came in at 0.2% versus forecast of 0.2% whilst CPI M/M came in at 0.4%, exactly same as street forecast. University of Michigan (Sentiment) May survey Final came in at 72.4 versus economists' forecast of 70.0 with previous reading of 69.8.

Data to be released next week include:

Japan domestic CGPI, machinery orders, consumer confidence; EU HICP final and trade balance; U.S. foreign treasury buys, net LT TIC flows and NAHB housing market index on Monday.

Australia RBA's board May minutes; Japan machine tools orders; U.K. CPI, RPI and DCLG house prices; Germany ZEW index and ZEW current situation; U.S. housing starts, building permits, capacity utilisation and industrial production on Tuesday.

Japan Tankan manufacturing; U.K. claimant count, ILO unemployment rate, average earnings 3m and MPC vote; Canada leading indicators and wholesale sales on Wednesday.

Japan GDP, capacity utilisation and industrial production; U.K. retail sales; Swiss ZEW index; U.S. jobless claims, existing home sales, leading indicators and Philadelphia Fed survey on Thursday.

Japan BOJ rate decision; Germany PPI; EU current account; Canada CPI and retail sales; EU consumer sentiment on Friday.

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Market Review - 16/05/2011 20:47 GMT

Euro pares gains in New York afternoon on Greek debt concern

Although the single currency opened lower in Australia and extended last Friday's selloff to a fresh 6-week low of 1.4049 after the weekend's news that Dominique Strauss-Kahn, head of the International Monetary Fund, was arrested in New York on Saturday over accusation of a sexual attack on his hotel room maid, euro later ratcheted higher in Asian midday partly due to hawkish remarks from European Central Bank Council member Ewald Nowotny who said it would be economic nonsense for Greece to leave Eurozone. Euro later rallied to as high as 1.4245 after ECOFIN Ministers attending the Eurogroup's meeting unanimously agreed to grant financial assistance in response to the Portuguese authority's request of 7 April 2011.

The single currency jumped up in New York morning after the release of U.S. March foreign treasury buys (came in at US$26.78 billion versus revised reading of US$30.58 billion in February) and net long term TIC flows data (came in at US$24.0 billion versus revised reading of US$27.2 billion in February) which showed that global demand for U.S. long-term financial assets such as government bonds slowed in March as investors shifted into shorter-term securities and China trimmed its portfolio of Treasuries.

U.K. Rightmove said U.K. house prices rose by 1.3% m/m and 0.7% y/y in May, comparing to the 1.7% m/m and 0.1% y/y in April. Rightmove said U.K. house price, adjusted for inflation, were still 10% below their 2008 peak and they were being artificially supported by the Bank of England's record low 0.5% base rate which has staved off repossessions. Despite euro-led brief drop to 1.6166 in Asian morning, the British pound found buying interest above last Friday's low of 1.6147 and ratcheted higher to 1.6222 in Asian afternoon before retreating to intra-day low of 1.6160. Sterling later staged a rebound in New York morning to as high as 1.6255 before declining to near 1.6200 in New York afternoon partly due to cross-selling of sterling versus euro as market pushed back expectations for increase in the U.K.'s benchmark rate.

Although the greenback bounced briefly from intra-day low of 80.63 to 81.07 in Asia, renewed selling interest emerged and cap dollar's upside. Usd/jpy moved within the above tight range in European and New York sessions. Eur/jpy, gbp/jpy and aud/jpy reached intra-day highs in New York morning before retreating and moved within daily range of 113.41 and 115.23, 130.42 and 131.49, and 84.95 and 86.09 respectively.

Aud/usd staged a rebound from intra-low of 1.0513 to as high as 1.0642 in New York morning and Nzd/usd rebounded from intra-day low of 0.7755 in European session to as high as 0.7868 in New York midday whilst usd/cad went through a roller-coaster session which rose from 0.9683 to as high as 0.9771 in European session and pared intra-day gains to 0.9690/92 in New York midday before recovery in New York afternoon. Spot gold and silver prices tumbled from intra-day highs of 1504.40 and 35.42 in New York morning as stock markets dropped sharply in New York afternoon.

Data to be released on Tuesday include:

Australia RBA's board May minutes; Japan machine tools orders; U.K. CPI, RPI and DCLG house prices; Germany ZEW index and ZEW current situation; U.S. housing starts, building permits, capacity utilisation and industrial production.

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