Intraday Market Thoughts

EUR/JPY Hits 12-year Low, China PMI Upcoming

by Adam Button
Jun 1, 2012 0:23

The euro continued to make new lows as economic data deteriorates and European policymakers stay mum on Spain. The yen was the top performer while the pound sterling lagged. Fridays Asia-Pacific session will be busy as China releases the official PMI. See the latest on our current Intermarket Insights below.

US economic data continues to show an economy that is muddling along. The Chicago PMI fell to 52.7 the lowest since 2009 as manufacturing strength ebbs alongside the slowdown in the global economy. The report followed soft data on initial jobless claims and ADP employment.

No solutions appear in sight for the credit crunch in Spain. A report saying the IMF is preparing contingencies for a bailout was flat out denied. Other chatter in Europe suggests no imminent plans to shore up banking or back distressed sovereign debt.

As a result, investors are fleeing to the safest assets. US, German and UK 10-year yields continued to make record lows. In turn, the forex market sought out yen. EUR/JPY closed below the January low of 0.9307 to the lowest since shortly after the common currency was introduced.

Signs of fear on global growth were everywhere with oil falling as low as $85.86. Some positive signs from the periphery helped to stabilize sentiment late in the day as polls show New Democracy with a slight lead over Syriza and Irelands referendum likely to pass.

The top release in Asia comes at 0100 GMT when the Chinese official manufacturing PMI will be released. The consensus is for a 52.0 reading after a 53.3 print in April. The final HSBC PMI will be released at 0230.

Other reports include Australias AiG performance of manufacturing at 2330 GMT and Japanese Q1 capital spending at 2350 GMT (exp +1.0%). Late in the session, the market may begin to quiet ahead of non-farm payrolls.

2-year support level hit in GBPUSD and executing out 1.5465 target. We stick with the 2 outstanding shorts in EURUSD and AUDUSD, whose objectives are longer than the usual targets in the Premium Insights. For direct access to our remaining trades, click here ; Non Subscribers can join here:



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