Intraday Market Thoughts

Falling USD Awaits Bernanke, Euro up on Retail Sales

by Patrik Urban
Jun 7, 2011 12:55

London session sees USD weaker across the board. Euro supported not only by Chinese comments but also by stronger EZ Retail Sales and higher German Factory Orders. RBA kept rates unchanged. ALl eyes on Bernanke's speech in US evening for clues on the economy & latest round of Fed policy easing.

The RBA held rates steady at 4.75% as expected last night. The rate statement was somewhat milder, stating that monetary policy was appropriate. After the initial 80 pip spike down, the Aussie was able to recover about half of the losses since London open.

The euro was bid after Chinese official warned of the risk of excessive holdings of USD assets. This statement was later labeled as personal view only.

70-pip gains realised in the EURUSD longs from yesterday's premium piece with the 1.4620-1.480 targets been hit (high was 1.4683). Click here to subscribe

EZ April Retail Sales came out stronger at 0.9% than expected 0.4%. This print marks a significant improvement after previous -0.9% which was revised higher from -1.0%. German Factory Orders also surprised to the upside as they improved from -2.7% to 2.8%. Market expected only an improvement to 2.1%

GBP continues to be bid and does not pay attention to May Halifax House Price index that disappointed at 0.1% vs. 0.4% expected.

There are no significant US economic data releases today. Market only awaits IBD/TIPP Economic Optimism index at 10:00 am EDT that is expected to decrease slightly from 42.8 to 42.1 and April Consumer Credit data released at 3:00 pm expected to decrease from 6B to 5.2B. Consumer debt level can be used to gauge lenders confidence. Lower reading therefore implies not only consumers unwillingness to spend but also lenders reluctance to lend.

Traders should also pay attention to speech given by Ben Bernanke, who will speak about the US economic outlook at the International Monetary conference in Atlanta at 3:45 pm.


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