New York Session Recap
Risk appetites returned in the absence of bad news, or at least 'not as bad as feared,' as major US bond insurers reported multi-billion dollar losses below analysts' expectations. US stocks gained about 1% as retailers also beat earnings estimates. As well, oil prices finally moderated, though only marginally, after making new all-time highs at $126.40/bbl, dropping back to around $123.80/bbl by the end of the day. The USD put in a mixed performance, rising against the JPY, but falling against other key currencies, which translates into higher JPY-crosses. EUR/JPY rose from around 159.30 in overnight trading to open NY around 160.30, and then went on to rise as high as 161.50 in the NY afternoon. EUR/USD opened NY trading around 1.5450, but eventually broke above key resistance at 1.5480 and gained to just over 1.5570 on EUR/JPY buying. ECB Pres. Trichet also added to EUR-buying interest by repeating that he thinks the current monetary policy stance is appropriate, suggesting that interest rates will remain on hold for the foreseeable future. USD/JPY remained generally higher, but a vicious rejection from just above 104.00 saw the price drop back to 103.25 before recovering back to 103.75.
The earthquake in China is causing some ripple in the commodities markets, as traders react to the potential disruption in raw materials' demand from the industrial colossus. While it's too soon to tell if industrial production has been affected, commodity markets appear to be in need of a pullback after recent sharp advances. China also announced an increase in its banking reserve requirements, effectively reducing funds available for lending by banks, to restrain economic activity after inflation hit 8.5% in April. Oil fell just over $2 on the day and gold only lost $2 to $882.70/oz.
Upcoming Economic Data Releases (Asia Session) Prior Forecast
- 5/12 22:45 NZ Food Prices (MoM) APR 0.70% - -
- 5/12 23:01 UK BRC April Retail Sales Monitor
- 5/12 23:01 UK RICS House Price Balance APR -78.50% -80.00%
- 5/12 23:15 US Fed's Lockhart to Speak at Financial Markets Conference
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