Thread: Daily FX Market Outlook by AceTrader-2-6-2011

Market Review - 01/06/2011 21:24 GMT

Euro falls sharply after Moody's downgrade on Greece and a 2.2% drop in the Dow

The single currency fell from four-week high of 1.4459 and tumbled to as low as 1.4321 after Moody's downgraded Greece's credit rating by three notches from B1 to extremely speculative level of CAA1, seven notches into junk territory. Moody's said 'Greece downgrade reflects increasing risk it will fail to stabilize debt position without restructuring'. Moody's also said 'Greece downgrade reflects rising likelihood International Monetary Fund, European Central Bank, European Union will require private creditors in restructuring for more funding; these risks imply at least an even chance of default over the rating horizon.'

Earlier in the day, despite falling from 1.4448 to 1.4384 in European morning, euro ratcheted higher and touched a four-week high of 1.4459 in New York morning after the release of much-weaker-than-expected U.S. ADP employment data before retreating sharply in New York afternoon on broad-based selling due to risk aversion after Moody's downgrade of Greece as well as a sharp fall in the Dow. Euro reached a session low of 1.4321. Eur/jpy tumbled sharply from 117.72 to 115.88.

The British pound ratcheted higher in Asian morning and later reached a session high of 1.6496 in European morning before tumbling sharply partly due to cross-selling of sterling versus euro after the release of weaker-than-expected U.K. manufacturing PMI in May. Cable continued to move lower and eventually tanked to an intra-day low of 1.6331 in New York afternoon.

The Swiss franc strengthened across the board against the greenback and euro after the release of stronger-than-expected Swiss PMI data in May. Usd/chf and eur/chf tumbled sharply from 0.8544 and 1.2319 to fresh record lows of 0.8383 and 1.2058 respectively.

Versus the greenback, the Japanese yen rose after the release of weak U.S. ADP employment data and usd/jpy reached a session low of 80.66 in New York morning before stabilising.

Standard & Poor’s 500 Index dropped sharply and plunged 2.3% on Wednesday. Dow Jones Industrial Index also plunged 2.2% (279 points), the biggest drop since August 2010 due to weaker-than-expected U.S. economic data.

On the data front, Chinese PMI for manufacturing sector in May came in at 52.0 versus street forecast of 51.6. Swiss PMI in May came in at 59.2 versus economists' forecast of 58.0 and previous reading of 58.4. U.K. manufacturing PMI in May came in at 52.1, the lowest since September 2009, versus the forecast of 54.1 and downwardly revised reading of 54.4 in April. U.S. private employers added 38,000 jobs in May, the lowest level since September 2010, far below economists' forecast of 175,000 jobs added. U.S. ISM manufacturing in May came in at 53.5, the biggest one month fall in over 25 years.

Data to be released on Thursday include:

Japan business capital expenditure; Australia retail sales and trade balance; U.K. PMI construction; U.S. jobless claims, durable goods (revised) and factory orders.

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Market Review - 02/06/2011 21:20 GMT

Euro touches one-month high on Moody's warning on U.S.

The single currency rallied in New York session on Thursday as Credit rating agency Moody's said 'if no progress on increasing the statutory debt limit in coming weeks, expects to place the U.S. government's rating under review for possible downgrade.'

Euro rebounded strongly from Australian morning low of 1.4308 and continued to move higher in Asian session after German Chancellor Angela Merkel said in a forum in Singapore that 'Germany is fully committed to the European Union and the euro remains strong and stable currency'. The single currency penetrated Wednesday's high of 1.4459 in early European trading to 1.4487 on comments from European Central Bank President Jean-Claude Trichet together with the early strong demand for 3.95 billion euros of medium-term Spanish bonds before dropping on profit-taking, however, renewed buying interest emerged at 1.4403 in New York and the single currency later touched a one-month high of 1.4515 against the greenback after Reuters news reported that eurozone officials had in principle approved the Greek program to run until mid-2014 and involved increased external funding and Moody's usd-bearish comments on U.S. debt limit.

Euro also strengthened against the Japanese yen, British pound and Swiss franc and touched session highs of 117.33, 0.8864 and 1.2225 respectively.

Versus the greenback, the Japanese yen went through a roller-coaster session on Thursday. The dollar jumped shortly after Tokyo opening to 81.33 on broad-based selling of the Japanese Yen on news that the main opposition Liberal Democratic Party, the New Komeito party and the Sunrise Party of Japan had submitted the no-confidence motion on Prime Minister Naoto Kan to the Diet's lower house on Wednesday evening and later renewed cross-buying of yen emerged after news that Kan said he would step down after the nuclear crisis has been dealt with. Later, the greenback weakened against the Japanese yen and fell to an intra-day low of of 80.55 on weak U.S. economic data before staging a recovery.

Japan's parliament on Thursday rejected a no-confidence motion submitted by opposition parties against Prime Minister Naoto Kan and his cabinet. The motion was defeated by a vote of 293 to 152 in the 480-member House of Representatives.

The British pound rebounded after extending recent decline to 1.6306 in European morning and jumped to an intra-day high of 1.6418 after release of better-than-expected U.K. construction PMI before retreating, traded in a volatile manner in US session and closed around 1.6372 near New York closing. U.K. construction PMI in May came in at 54.0 versus economists' expectation of 53.6. Earlier in the day, Bank of England policymaker Paul Fisher said that he would consider quantitative easing, which boosted speculation that interest rates would stay on hold for some time.

In other news, European Central Bank President Jean-Claude Trichet said 'loans and structural adjustment programmes are first stage of aid process and indicates Europe should consider strengthening central control economic policy if efforts to deal with its debt crisis do not deliver results'. Spain's treasury sold 2.753 and 1.200 billion euros of 2014 and 2015 bond respectively. Spain said 2014 and 2015 bond bid-to-cover ratio were 2.5 and 3.0 versus previous auction of 1.8 and 1.6 respectively.

On the data front, U.S. weekly jobless claims data came in at 422,000 versus the economists' forecast of 415,000. U.S. productivity revised to 1.8% against the expectation of 1.7% and previous reading of 1.6%. U.S. April factory orders came in at -1.2% versus economists' forecast of -1.0%.

Data to be released on Friday include:

China non-manufacturing PMI and HSBC services PMI; German services PMI; Eurozone services PMI; U.K. services PMI; U.S. average hourly earnings, non-farm payrolls, private payrolls, unemployment rate and ISM manufacturing.

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Market Review - 06/06/2011 21:26 GMT

Euro weakens on Monday as second Greek bailout was uncertain

The single currency weakened on Monday after a German Finance Ministry spokesman said 'not certain whether there will be second bailout for Greece and under what terms'. The spokesman also said 'Chancellor Angela Merkel indicates Germany will decide on its bailout moves, now in Europe there are only suggestions'.

Euro retreated after climbing briefly above Friday's 1.4643 high to 1.4659 in Australian session and later ratcheted lower to 1.4593 at New York opening before light support emerged on rumours that European Central Bank would raise rate in July, however, cross-selling in euro pressured price again at 1.4629 and the single currency fell to a session low of 1.4557 in New York afternoon after comments from Eurogroup Chairman Jean-Claude Juncker who said 'Eurozone FX rate objectively overvalued versus other major currencies'.

The British pound pared last Friday's gains and fell sharply on Monday after early brief rise above Friday's 1.6438 high to 1.6460 at Asian opening due to active cross-selling in sterling. Cable extended intra-day losses to as low as 1.6341 in New York afternoon on comments from International Monetary Fund which said 'Britain does not need to change its current economic policies as recent weak growth and high inflation is likely to be temporary but if growth faltered further and inflation also eased, then a mix of more quantitative easing by the Bank of England and tax cuts would needed to be considered'. Gbp/jpy retreated from 132.27 to as low as 130.83.

Versus the Japanese yen, the greenback edged lower to intra-day low of 79.98 in European morning after brief recovery to 80.40 in Asian morning before moving narrowly in New York session as market's focus was on other currencies. Eur/jpy edged low from session high of 117.71 to as low as 116.59 in New York afternoon before recovering.

In other news, European Central Bank President Trichet said "this is not a crisis of the euro as a currency; have seen in recent months upside risks to outlook for price stability over medium term; Greek fiscal adjustment is a must; doesn't believe there is a need for restructuring or haircuts on Greek debt."

On the data front, Eurozone Sentix investor confidence in June came in at 3.5 versus economists' expectation of 9.3 and previous reading of 10.9. Eurozone PPI m/m and y/y in May came in at 0.9% and 6.7% versus economists' forecast of 0.8% and 6.6% respectively. Canada building permits in April dropped 21.1% versus expectation of 6.0% decrease. Canada Ivey PMI in May came in at 69.1 versus economists' forecast of 60.0.

Data to be released on Tuesday include:

U.K. BRC retail sale; Australia RBA rate decision; Japan leading indicators; Swiss CPI; Eurozone retail sales; Germany factory orders.

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Market Review - 07/06/2011 21:30 GMT

Euro rises on comments from Chinese FX official, Obama, Merkel and Bernanke
The single currency resumed recent upmove and rallied on Tuesday after comments from Chinese FX official who warned of risks in "excessive" holdings of U.S. dollars assets and U.S. dollar would continue to weaken against other major currencies. Euro rose strongly in Europe after the remarks and extended intra-day upmove from Asian low of 1.4564 to 1.4696 in New York afternoon.

Comments from U.S. President Barack Obama and German Chancellor Angela Merkel also supported the single currency in New York morning. The single currency briefly extended gains after comments from Federal Reserve Chairman Ben Bernanke who acknowledged a slowdown in the economy but the Fed offered no suggestion for further monetary stimulus to support growth.

Federal Reserve Chairman Ben Bernanke said 'U.S. economy growing well-below potential, accommodative monetary policies are still needed; most Fed officials see recent inflation rise as transitory; best way for Fed to support U.S. dollar in medium term is to pursue dual mandate of maximum employment, price stability'.

U.S. President Barack Obama said 'agree the debt crisis in Europe can't be allowed to threaten the world's economic recovery; confident that Germany's leadership with other Eurozone members will help Greece return to growth, manage its debt'. German Chancellor Angela Merkel said 'Eurozone share a common interest in ensuring the common currency bloc is not endangered; confident U.S. will shoulder its fiscal responsibilities just as Europe is shouldering its duties; euro stability influenced if a Eurozone member is in trouble, we will act to guarantee sustainability.'

Sterling was under pressure in Asian morning after the release of weaker-than-expected U.K. BRC retail sales and dropped briefly to 1.6324 before rising sharply to as high as 1.6474 in early European trading on improved risk appetite. Versus the Japanese yen, the British pound also rallied from session low of 130.90 to intra-day high of 132.08.

The Swiss franc weakened against the greenback after release of Swiss CPI data which dampened speculation that Swiss central bank would raise borrowing costs. Swiss CPI m/m and y/y in May came in at 0.0% and 0.4% as expected with previous readings of 0.1% and 0.3% respectively. Usd/chf rose sharply from a fresh lifetime low of 0.8327 in European morning to a session high of 0.8391 in New York morning before easing.

Aussie dipped after Reserve Bank of Australia kept overnight cash rate unchanged at 4.75%. Reserve Bank of Australia said global economy continued to expand and policy was appropriate. Aud/usd dropped sharply from Asian high of 1.0766 to as low as 1.0671 before European opening and recovery was seen later.

Versus the Japanese yen, the greenback dropped briefly below 80 level to re-test Monday's low of 79.98 in New York afternoon after comments from Federal Reserve Chairman Ben Bernanke before moving sideways.

On the data front, UK halifax data showed U.K. home prices rose 0.1% in May (expectation was 0.2% rise) versus a 1.4% decline the previous month. U.K. BRC retail sales fell unexpectedly in May and dropped 2.1% versus street forecast of 2.25% increase and previous reading of 5.2%. Eurozone retail sales in April came in at 0.4% m/m and 0.9% y/y versus economists' forecast of 0.4% and 0.0% respectively. German industrial orders m/m and y/y in April rose by 2.8% and 10.5% versus economists' forecast of 2.0% increase and 9.0% increase respectively.

Data to be released on Wednesday include:

U.K. BRC shop price Index; Japan current account and economic watch DI; Swiss unemployment rate; Germany import and export, trade balance and industrial production; Eurozone GDP; Canada housing starts.

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Market Review - 08/06/2011 21:36 GMT

The single currency falls on fears over global growth

Euro fell on Wednesday due to recent weak U.S. economic data and weaker-than-expected German economic data, dampening investors' demand for risky assets.

The single currency retreated from Australian high of 1.4695, just shy of Tuesday's one-month peak of 1.4696 and ratcheted lower in European session after German Finance Minister Wolfgang Schaeuble said in letter to European Central Bank, International Monetary Fund and Euro partners that 'wants "qualified and substantial" contribution of bondholders to any additional Greek debt relief' and the release of weaker-than-expected German industrial production in April, the pair touched a session low of 1.4565 in late New York afternoon on concern over Greek debt crisis partly due to news from German newspaper Handelsblatt which said 'German Finance Minister Wolfgang Schaeuble tells coalition members of parliament that Greece needs at least additional 90 billion euros through 2014'.

Sterling also weakened against the greenback in European session after an analyst from Moody's gave warning on UK's sovereign rating. Moody's confirmed stable outlook for UK's AAA rating and might reconsider if growth lower and fiscal plans slipped. Moody's analyst Sarah Carlson said in an interview with news agency Market News International that Britain's weaker growth prospects this year and next did not alone cast doubt on the UK's sovereign rating.

Despite the British pound's recovery fm Asian low of 1.6406 to around 1.6438 in European morning, cable tumbled to 1.6355 after the news n then price ratcheted to a day's low of 1.6348 in New York morning before staging a strong short-covering rebound due to active cross-buying in sterling (especially versus euro). Eur/gbp pared all of its intra-day gains and dropped from session high of 0.8976 to as low as 0.8885 in late New York trading.

Versus the Japanese yen, the greenback fell to 79.75 in Asian morning, caused by a wave of heavy broad-based buying of Japanese yen and on comments from New York Fed president William Dudley who said at an event in New York that 'U.S. recovery remains "distinctly subpar" despite aggressive monetary, fiscal stimulus', however, buying interest there lifted price to 80.17 in Tokyo lunch session before dropping below 80 level to one-month low of 79.70 as concerns over U.S. economic growth dampened investors' demand for risky assets. Eur/jpy, gbp/jpy and aud/jpy tumbled sharply from 117.85, 85.97 and 131.94 to 116.30, 84.43 and 130.50 respectively.

Commodity currencies were under pressured on increased risk aversion. Aud/usd tumbled from 1.0724 to as low as 1.0588 whilst usd/cad rebounded from 0.9740 to 0.9821. Earlier in the day, nzd/usd also retreated from 0.8214 to 0.8142 before rising sharply to 0.8220 at Australian opening shortly after the Reserve Bank of New Zealand left rates on hold as expected and said rate rises would be needed over the next two years to contain inflation.

In other news, Fitch ratings said 'agreement will ultimately be reached on raising U.S. debt ceiling; failure to raise the debt ceiling in a timely manner would imply a crisis of governance that could imperil the U.S. 'AAA' status; unlikely that U.S. AAA status would be retained in the short to medium term after default'.

U.S. Fed Beige Book said 'some deceleration in U.S. growth seen in May though economic activity generally continued to expand.'St. Louis Federal Reserve Bank President James Bullard said 'U.S. fiscal situation biggest risk to world economy; U.S. debt default could turn into 'global macro shock'; U.S. economy not weak enough to warrant further Fed stimulus; sees Fed on hold after end of QE2'.

On the data front, Japanese May Economic Watchers' Survey came in at 36.0 versus economists' forecast of 33.0 and 28.3 in April. German import and export m/m in April came in at -2.5% and -5.5% versus economists' forecast of -1.0% and -3.0% respectively. Eurozone revised Q1 GDP came in at 0.8% m/m and 2.5% y/y versus preliminary reading of 0.8% m/m and 2.5% y/y. German April industrial output dropped by 0.6% m/m versus the economists' forecast of 0.0% m/m and revised reading of 1.2% m/m in March. Canada housing starts in May came in at 183,600 versus economists' expectation of 183,000.

Data to be released on Thursday include:

New Zealand RBNZ rate decision; Japan GDP, GDP deflator, consumer confidence and machine tools orders; Australia unemployment rate and employment change; U.K. trade balance, BOE rate decision and BOE asset purchase target; Eurozone ECB rate decision; Canada new housing price index, import and export and trade balance; U.S. trade balance, jobless claims and wholesale inventories.

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Market Review - 09/06/2011 21:34 GMT

Euro falls after ECB dampened expectations for further rate rise and renewed Greek debt uncertainty

The single currency tumbled against the greenback on Thursday after European Central Bank lowered inflation forecast next year, dampening speculation for further rate hike after July and news that European governments and the International Monetary Fund (IMF) might lend as much as an extra 45 billion euros to Greece under the latest three-year plan to avoid the euro area's first sovereign default.

Earlier in the day, euro ratcheted higher to 1.4646 in early European trading on comments from Eurogroup Chief Jean-Claude Juncker who said 'it is too soon to give a definite amount for a new aid package for Greece' and eur/usd later jumped to 1.4655 on speculation of an interest rate hike in July shortly after the start of ECB's press conference, however, offers quickly emerged there as ECB trimmed 2012's inflation forecast from 2.4% to 2.3% and investors sold euro broadly, price tanked to as low as 1.4478 in New York morning before stabilising. Euro also weakened against Japanese yen, Swiss franc and British pound and the cross-pairs tumbled to as low as 115.93, 1.2191 and 0.8847 respectively.

European Central Bank President Jean-Claude Trichet said in the press conference after ECB kept benchmark refinancing rate unchanged at 1.25% that 'monetary policy stance is still accommodative; strong vigilance warranted; we are not in favour of restructuring of Greek debt.' Eurozone sources said 'new bailout for Greece likely to total about 120 billion euros; new bailout may comprise 30 billion euros from private sector, 30 billion euros from privatisations, up to 60 billion euros from EU/IMF'.

Sterling ratcheted higher in Asian session and climbed briefly to an intra-day high of 1.6467 in European morning before retreating and the euro-led decline later pressured price sharply lower to a session low of 1.6358 in early New York trading. U.K. trade balance in April came in at -7.389 billion pounds versus economists' forecast of -7.55 billion pounds. Bank of England held key interest rates at 0.5% as widely expected, making no change to quantitative easing total of 200 billion pounds and didn't provide statement on monetary policy alongside June rate decision.

Buying interest on the greenback emerged partly due to weakness in European currencies and increased US 30-year bonds yields (the $13 billion auction of 30-year bonds drew a yield of 4.238%, compared with the average forecast of 4.216%; bid-to-cover ratio was 2.63, compared with an average of 2.65).

Usd/jpy and usd/chf rose from intra-day low of 79.84 and 0.8355 to session highs of 80.42 and 0.8446 in New York respectively.

On the data front, Japan Q1 GDP came in at -0.9% versus economists' expectation of -0.8%. Australia unemployment rate in May came in at 4.9% as expected and employment change in May came in at 7,800 versus economists' forecast of 25,000. U.S. trade balance in April came in at -US$43.68 billion versus economists' expectation of -US$48.8 billion. U.S. Jobless claims came in at 427,000 versus economists' forecast of 415,000.

Data to be released on Friday include:

Japan domestic CGPI; China exports, imports and trade balance; Germany CPI and HICP final and wholesale price index; U.K. industrial, manufacturing production, PPI input, output and core; Canada employment change and unemployment rate; U.S. export and import price index and Fed budget.

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Market Review - 14/06/2011 21:35 GMT

The single currency rises on improved risk appetite

Euro resumed previous session's gain on Tuesday and rose to as high as 1.4498 in New York afternoon in part due to improved risk appetite after the release of Chinese and U.S. economic data. Chinese data showed economic activity was only moderating but would not suffer a hard landing, whilst U.S. retail sales fell less than forecast in May.

Active cross-buying in euro due to renewed risk appetite lifted price higher from 1.4379 in Asia and the single currency later penetrated Monday's top of 1.4430 to a session high of 1.4498 in New York trading before retreating. Euro also strengthened against the Japanese yen, sterling and Swiss franc and these pairs rose from 115.25 to 116.69, from 0.8785 to 0.8843, and from 1.2012 to 1.2255 respectively.

Euro-led rally also pushed sterling higher against the greenback in Asia and early European trading, cable rose to a session high of 1.6443 in European morning before retreating after release of UK CPI data in May, which came in as widely expected at 0.2% m/m and 4.5% y/y, and showed that the Bank of England might not raise interest rates any time soon, price traded around 1.6370 near New York closing.

China consumer price inflation ticked up to 5.5% y/y in May, in line with median forecasts, rising from 5.3% in April and staying above 5% for a third straight month. China investment growth in May was slightly stronger than expectations at 25.8% y/y versus the median forecast of 25.2%. China industrial output in May ticked down only slightly to 13.3% y/y in May versus the median forecast of 13.1%. U.S. retail sales showed a modest decrease in the month of May, a 0.2% decline from April, marking the first drop since June 2010 but was smaller drop than the 0.3% decrease generally expected.

Versus the Japanese yen, the greenback pared initial losses and rose after China released its economic data to 80.46 in European morning and later touched a session high of 80.63 in New York morning on improved risk appetite after the release of U.S. economic data. Bank of Japan finished its 2-day monetary policy meeting and announced to keep overnight call rate target unchanged at 0-0.1% by unanimous vote. Bank of Japan said 'to increase size of loan scheme targeting growth industries; upgrades assessment of Japan's economy; Japan's economy to remain under downward pressure for time being'.

In global stock markets, FTSE-100, CAC-40 and DAX rallied by 0.51%, 1.50% and 1.69% respectively. Dow Jones Industrial Average rose by 123 points to 12,076. S&P 500 rose by 16 points to 1,287.

In other news, China Central Bank (PBOC) raised banks' required reserved ratio (RRR) by 50 bps to 21.5% but kept its one-year lending rate at 6.31% and one-year deposit rate at 3.25%.

Federal Reserve Chairman Ben Bernanke said 'failure to raise debt ceiling could lead to ratings downgrades, damage special role of dollar, U.S. treasury market; failure to raise debt ceiling would push up interest rates, making deficit problem worse.'

Data to be released on Wednesday include:

U.K. Nationwide consumer confidence, claimant count, ILO unemployment rate and average earnings 3m; Australia Westpac consumer confidence; Japan machine tools orders; Swiss combined PPI; EU industrial production; U.S. CPI, real earnings, foreign treasury buys, net LT TIC flows, capacity utilisation, industrial production and NAHB housing market index.

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Market Review - 15/06/2011 21:33 GMT

The greenback rallies across the board on renewed Greek debt contagion fear
The greenback rose sharply against its major counterparts on safe-haven demand due to Greek default worries. Euro came renewed selling pressure in Australian session when Moody's had placed France's BNP Paribas, Societe Generale and Credit Agricole on review for possible downgrade citing their holdings of Greek debt and the rating agency later reviewed ratings of subsidiaries of Portuguese Banks in Brazil in New York morning on review for possible downgrade.

Renewed concerns over Greek debt boosted safe-haven demand for usd and greenback strengthened across the board on Wednesday, pushing eur/usd sharply lower from 1.4451 to a session low of 1.4156 before stabilising. Risk aversion pressured euro crosses with eur/jpy, eur/gbp and eur/chf also tumbling from 116.48, 0.8823 and 1.2245 to 114.56, 0.8750 and 1.2081 respectively.

The dollar Index, which measures the USD against a basket of six currencies, rose to as high as 75.66 in New York session. Usd/jpy and usd/chf extended recent gains and climbed to session highs of 81.08 and 0.8552 respectively in New York session. Apart from greenback's broad-based firmness, speculation that the Swiss National Bank (SNB) would keep interest rates unchanged at its monetary policy meeting on Thursday also helped usd/chf rally from 0.8443 to 0.8552 in New York afternoon before easing.

Renewed Greek debt concerns also damped demand for higher-yielding assets such as Australian dollar and New Zealand dollar. Aussie and kiwi fell sharply from 1.0715 and 0.8209 to 1.0535 and 0.8035 respectively whilst loonie rose sharply from 0.9671 to 0.9829.

The British pound nose-dived after the release of lower-than-expected U.K. claimant count data (U.K. Office for National Statistics reported that the U.K.'s jobless claims rose by 19,600 in May from a revised 16,900 increase in the prior month and versus economists' forecast of an increase of 6,500) and cable extended intra-day losses from Australian high of 1.6383 to 1.6168 in New York trading.

In global stock markets, FTSE-100, CAC-40 and DAX fell by 1.04%, 1.49% and 1.25% respectively. Dow Jones Industrial Average closed down 178 points at 11,898. S&P 500 also closed down by 22 points to 1,266.

In other news, to prevent financial disaster for Greece, euro zone officials might forge a compromise by a June 23-24 EU summit. Reuters also reported a meeting would take place in Berlin on Friday between German Chancellor Angela Merkel and French President Nicolas Sarkozy, where the outlines of a final deal could be sketched out.

On the data front, the U.S. consumer-price index in May increased 0.2%, versus economists' forecast of 0.1%. The core measure, which excluded more volatile food and energy costs, climbed 0.3%, the biggest increase since July 2008. Swiss producer prices fell by 0.2% m/m n 0.4% y/y in May versus the consensus forecast of 0.0% m/m and -0.2% y/y respectively.

Data to be released on Thursday include:

Japan Tankan manufacturing; Swiss industrial production and SNB rate decision; U.K. retail sales; EU employment and HICP final; U.S. current account, housing starts, building permits, jobless claims and Philadelphia Fed survey.

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Market Review - 16/06/2011 21:57 GMT

Euro rebounds in NY on improved risk appetite as U.S. stocks gain

The single currency staged a modest rebound in New York afternoon session after falling to a three-week low of 1.4073 against the dollar in Europe and a fresh lifetime low of 1.1946 versus Swiss franc on Thursday due to political turmoil in Greece and euro-bearish comments from ECB members.

During the day, despite euro's initial sideways trading above Wednesday's low of 1.4156, renewed selling at 1.4204 checked intra-day gain in Australia and price later tumbled to 1.4090 ahead of European opening, euro then dropped to a three week low of 1.4073 in European morning after bearish comments fm European Central Bank Governing Council member Nout Wellink. However, the single currency ratcheted higher to 1.4188 in New York morning on short covering and active cross buying in euro together with better-than-expected US economic data, price eventually rose to sesion high of 1.4224 in late New York trading as U.S. stocks rebounded. Dow Jones Industrial Average closed up 64 points to 11,961 and Standard and Poor's 500 gained 2 points to 1,267.

European Central Bank Governing Council member Nout Wellink was quoted by Dutch newspaper Het Financieele Dagbled as saying a planned European aid fund might need to be doubled before rebound to take place as eurozone sources said 'expect International Monetray Fund to pay next Greek aid tranche on basis of European Union commitment to support Greece further out'.

More euro-bearish comments from ECB council Yves Mersch in NY trading who said 'disorderly insolvency of Eurozone member state would have devastating consequences for it and whole Eurozone'. Euro fell briefly fm 1.4188 to 1.4135 before rebounding on renewed buying by soveriegn names.

Eurozone debt concerns pressured the single currency against the Japanese yen and especially, Swiss franc. Eur/jpy retreated from 114.97 to 113.51 whilst eur/chf hit all-time low at 1.1946 before staging a recovery.

The pound weakened against the dollar and cable ratcheted lower from Asian high of 1.6225 after the release of weaker-than-expected U.K. retail sales data, dampening speculation that BoE would raise interest rates anytime soon. Cable eventually fell to a day's low of 1.6078 in NY morning before staging recovery in tandem with the euro.

U.K. retail sales came in at -1.4% m/m and 0.2% y/y in May, much weaker than the economists' forecast of -0.6% m/m and 1.5% y/y respectively) before stabilising.

In other news, Swiss National Bank held target range for 3-month Swiss franc LIBOR unchanged at 0.0-0.75% and SNB intended to keep the LIBOR within the lower part of the target range at around 0.25%. Swiss National Bank said 'sees lower growth due to appreciation of Swiss franc.'

On the data front, U.S. jobless claims decreased to 414,000 versus economists' forecast of 420,000 and previous upwardly revised reading of 430,000. U.S. housing starts rose by 3.5% to 0.56 million whilst building permits increased by 8.7% to 0.612 million. Philly Fed factory activity unexpectedly shrank to minus 7.7 in June, its lowest level in nearly two years, from positive 3.9 the month before.

Data to be released next week include:

EU trade balance; Canada wholesale sales; U.S. U. Michigan survey Final and leading indicators on Friday.

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Market Review - 17/06/2011 21:38 GMT

Euro rallies on supportive eurozone leaders' comments on Greece

The single currency rallied against the greenback on Friday on euro-supportive comments at the Merkel-Sarkozy joint press conference which sparked off heavy broad-based buying of euro.

Earlier in the day, euro was under initial pressure in Asian session on news that Greek Prime Minister George Papandreou had to keep his Pasok party's shrinking parliamentary majority in line to pass 78 billion euros in austerity measures required for Greece to get a second bailout from the European Union and comments from Eurogroup Chairman Jean-Claude Juncker that the German Parliament wanted to decide on Greek aid in autumn, pushing back hopes for a mid July decision.

Despite initial strong retreat fm 1.4224 in Australia, euro rebounded from 1.4127 ahead of European opening. The single currency then rallied on comments from European Council President Herman Van Rompuy who said 'will discuss containing Greek contagion risk in meeting with Irish Prime Minister; there will be discussion about the situation in the eurozone, particularly Greece'.

Intra-day upmove accelerated before the scheduled joint-press conference by the German and French leaders at 09:45GMT, the single currency quickly climbed above stops above 1.4220 and hit a high of 1.4300 near European midday, price penetrated option barrier at 1.4300 to a session high of 1.4339 in New York morning after release of weaker-than-expected U.S. consumer sentiment and U.S. growth concerns (University of Michigan preliminary index of consumer sentiment dropped to 71.8 from 74.3 in May.

The International Monetary Fund lowered U.S. 2011 GDP growth forecast to 2.5% from 2.8% and 2012 GDP growth forecast to 2.7% from 2.9% compared to forecast earlier in April before retreating after rating agency Moody's placed Italy's AA2 ratings on review for possible downgrade .

German Chancellor Angela Merkel said in the joint news conference that 'Europe and euro closely linked, Germany has profited enormously from euro; will do everything to support euro, get through difficult time; the faster we solve euro problems the better; want involvement of private creditors on voluntary basis; will work out details of private sector involvement with ECB, wants quick solution; France and Germany united that they want quick solution on Greece; does not want to trigger credit event; Vienna initiative good foundation for private sector participation.'

French President Nicolas Sarkozy said 'France and Germany have same position on Greece and euro; France and Germany want new programme put in place quickly; Greek deal needs to be agreed in accordance with the ECB; 'there is a breakthrough' on bondholder involvement.'

Cross selling in sterling (especially versus the single currency on euro-supportive news on Greece) pressured the pound, however, cable managed to pare early losses and ended little change on Friday. During the day, gbp/usd continued to move lower from Thursday high of 1.6170 in Asian session and dropped to a session low of 1.6094 before rebounding, climbed to 1.6200 in New York afternoon.

Versus the Japanese yen, dollar remained under pressure throughout the day and intra-day decline gathered momentum in Europe due to broad-based weakness of the greenback, the pair later fell to 80.02 and closed near session low at New York closing.

In other news, International Monetary Fund's regular assessment of global economic prospects said 'U.S., some Eurozone countries "playing with fire" unless they make difficult budget decisions; lifts euro area 2011 GDP growth forecast to 2.0% from 1.6% in April, lowers 2012 GDP growth forecast to 1.7% from 1.8%; cites Greece, Ireland, Japan and U.S. as countries with biggest need to repair public finances.'

On the data front, the eurozone trade balance came in at -4.1 billion euro versus economists' forecast of -2.1 billion and seasonal adjusted figure of 1.6 billion in March. The Conference Board released its index of leading economic indicators in May, which showed an increase of 0.8%, more than forecast, after a 0.4% drop a month earlier.

Data to be released next week included:

U.K. Rightmove hse prices; Japan import, export, trade balance, Cabinet Office economic report and leading indicators; Germany PPI; EU current account on Monday.

RBA's board June minutes; U.K. PSNCR, PS net borrowing and CBI orders; Germany ZEW economic sentiment and ZEW Current Situation; Canada leading indicators and retail sales; U.S. existing home sales on Tuesday.

Australia Westpac leading economic index; U.K. BOE releases minutes of the MPC's meeting; EU industrial orders and consumer sentiment; Swiss ZEW index; U.S. monthly home price and Fed rate decision on Wednesday.

Swiss trade balance; Germany manufacturing and services PMI; EU manufacturing and services PMI; U.K. CBI distribution trade; U.S. jobless claims and new home sales on Thursday.

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