Intraday Market Thoughts

Euro at 1-Month Low on Portuguese Turmoil

by Adam Button
Jul 2, 2013 23:55

Election winds are blowing in Portugal after a second top politician resigned in as many days. The US dollar was the top performer Tuesday while AUD slumped. The upcoming session features data on the Australian trade balance and retail sales. 1 more USDJPY was added after 1 USDJPY hit all targets and the other went unfilled by 5 pips (highest entry was at 99.45). This follows today's 2 trades in USDCAD/charts, yesterday's USDJPY and USDCHF trades. For full access, see latest Premium Insights.

A storm of US dollar buying hit the market as North American markets opened and USD/JPY hit Ashraf's initial target of 1.0060. Dollar buying also sparked a 21-month high in USD/CAD. Initially, the euro fell as well but support ahead of last week's low of 1.2985 held and it bounced to 1.3039.

The euro began to break down when Portugal's foreign minister announced his resignation. It comes a day after the finance minister quit and led to a 30 bps rise in Portuguese 10-year yields. The government will be forced to call new elections if the junior coalition partner withdraws support, at that is growing increasingly likely.

Oil has been out of the spot light for much of the year but it threatens to make headlines as WTI nears $100 for the first time in 2013. The gains Tuesday are especially bullish because they came on a weak day for broader commodities and a strong day for the dollar. However some caution is warranted as emerging markets continue to struggle. Brazil's Bovespa fell 4% on Tuesday to the lowest since 2010.

At 0200 GMT, markets get a look at the official Chinese non-manufacturing PMI. The prior reading was 54.3. Later, the HSBC version will also be released.

At 0230 GMT, Australian releases trade balance numbers for May; a surplus of 53 million is expected. The more important number will be May retail sales, which are forecast to rise 0.3%.

Act Exp Prev GMT
Trade Balance (MAY)
$-40.10B $-40.29B Jul 03 12:30
Trade Balance (MAY)
28M Jul 03 1:30
Retail Sales (MAY) (m/m)
0.3% 0.2% Jul 03 1:30
Retail Sales (MAY) (m/m)
0.2% -0.5% Jul 03 9:00
Retail Sales (MAY) (y/y)
-2.0% -1.1% Jul 03 9:00
ISM Non-Manufacturing PMI (JUN)
54.0 53.7 Jul 03 14:00
54.3 Jul 03 1:00
51.2 Jul 03 1:45
Markit PMI Composite (JUN)
48.9 47.7 Jul 03 7:58
Markit Services PMI (JUN)
48.6 47.2 Jul 03 7:58

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