Currency Updates:
The Australian Dollar (AUD): Europe pushed the pair lower before Australia Government budget report and hit a low of 0.9333. Short covering started as there were no major surprises in the report. The lift got further boosted as Germany’s Buba agrees with ECB’s June stimulus if inflation forecast came in lower and got the AUD up towards 0.9350. AUD then made another rally on the miss of U.S retails data to a high of 0.9383. However, 0.9400 barrier kept the AUD rally limited.
The AUD: Little data due for today, AUD moves should come from crosses. For now, range of 0.9330-0.9395 is still in play, a break of 0.9400 would lead to a retest of April high 0.9460.
EUR/USD: EUR broke below the 21-WMA, 100-DMA and daily cloud base to hit jsut below 1.3700 as Buba is open to ECB stimulus decision. The pair managed to lift itself for a short period due to miss on U.S retail sales, but dropped back down to 1.3689 as USD regained it strength. Germany and French inflation data due tomorrow, if it comes in weak then EUR may test key support of April low (1.3672), a break below would test 1.3475/80.
USD/JPY Bad news was good news for the USD/JPY after a fashion, as below-f/c US Retail Sales and soft Im/Ex Prices hurt Tsy yields, and the USD for a little while. Eventually, though, the drop in yields fueled fresh demand for stocks, in the US and abroad (save for Italy), which made USD/JPY’s post-data dip toward 102 look like a bargain for those looking to lever up carry trades and bet on Japanese reflation, either with or without QQE2 many expect in H2. Next hurdles are the 61.8% of May’s range and the daily Cloud base at 102.42/44. Talk of light offers, some from exporters, into 102.50 and more so either side of 103. EUR/JPY struggled around the recently pierced but not closed below support by 140 as result of renewed EUR selling on ECB easing expectations; ZEW & BuBa chatter the latest catalysts for EUR selling. The cross needs to retake the 50% Fibo, Tenkan & Kijun hurdles in the 141.12-17 range to shake off the bearish bias since last Thur’s plunge below the up TL from last April’s lows. Japan Corp Prices and Machine Tool Orders for Mar & Apr, respectively, are on tap tonight. Q1 GDP is out Thur along with a raft of EZ & US data.
Looking Ahead – Economic Data (GMT)
• 22:45 NZ Retail Sales Volumes QQ Q11.20%-prev
• 22:45 NZ Retail Qrtly Vs Yr Ago Q13.90%-prev
• 23:50 JP Corp Goods Price MM Apr2.80%, 0.00%-prev
• 23:50 JP Corp Goods Price YY Apr4.00%, 1.70%-prev
• 03:00 NZ RBNZ Offshore Holdings Apr 61.30%-prev
Looking Ahead – Events, Other Releases (GMT)
• : NZ RBNZ Financial Stability Report
