The Euro and the British Pound may face selling pressure in the coming session as the UK unemployment rate rises to the highest in nearly 12 years while Euro Zone inflation shrinks for the first time since the creation of the single currency in 1991. May’s Swiss Retail Sales report is also on tap.
Key Overnight Developments
• Australia’s Leading Economic Index Falls For the First Time Since February
• Bank of Japan Keeps Rates at 0.10% But Cuts GDP Growth Forecast, Extends QE
• Euro, British Pound Rise Against US Dollar on Overnight Stock Gains
Critical Levels
The Euro traded higher in the overnight session, adding 0.2% against the US Dollar. The British Pound followed suit, testing as high as high as 1.6337. The greenback lost ground as stocks followed Wall St higher across Asian exchanges, trimming demand for the safety-linked currency.
Asia Session Highlights
Australia’s Westpac Leading Index shrank for the first in three months in May, slipping -0.2%. The metric is designed to predict The annual rate of decline slowed to -3.9%, the lowest in at least 6 months. Westpac chief economist Bill Evans struck a cautiously optimistic tone following the release, saying “This reading supports the reasonable expectation that we have passed the worst, although the index is still contracting on a six-month annualized basis.” Evans has previously revealed that Westpac expects the economy will shrink 0.6% in the second quarter and contract at an annualized rate of -1.5% through the second half of this year.
Australia has shown tentative signs of stabilization as the government distributed over A$12 billion in cash handouts and committed to A$22 billion for infrastructure projects. The big question going forward is if current momentum can be maintained as the flow of stimulus cash dries up. On balance, the outlook seems far from rosy: the labor market continues to suffer, erecting barriers to a meaningful rebound in domestic demand, while the latest trade data reveals lackluster overseas demand for coal and iron ore, Australia’s top export commodities. Although the Reserve Bank of Australia kept interest rates unchanged at 3% earlier this month, Governor Glenn Stevens noted that there is still “scope for further easing of monetary policy”, identifying credit conditions and the effects of economic weakness on asset quality as “a challenge”.
The Bank of Japan kept interest rates unchanged at 0.10%, as economists expected. Policymakers said that “economic conditions have stopped worsening” and restated expectations that the economy will begin to recover by the second half of the 2009 fiscal year (the six months starting in October). Maasaki Shirakawa and company did qualify their optimism however, saying “uncertainty over the economic outlook is high” and revising their growth projections downward to reflect a -3.4% GDP contraction (versus the previously reported -3.1%) in the 12 months to April 2010. The BOJ also extended standing credit easing measures, saying they will keep current loan collateral practices in place through March of next year versus December and pay interest on bank’s reserves through January 2010 (as opposed to October 2009 as originally planned).
Key Overnight Developments
• Australia’s Leading Economic Index Falls For the First Time Since February
• Bank of Japan Keeps Rates at 0.10% But Cuts GDP Growth Forecast, Extends QE
• Euro, British Pound Rise Against US Dollar on Overnight Stock Gains
Critical Levels
The Euro traded higher in the overnight session, adding 0.2% against the US Dollar. The British Pound followed suit, testing as high as high as 1.6337. The greenback lost ground as stocks followed Wall St higher across Asian exchanges, trimming demand for the safety-linked currency.
Asia Session Highlights
Australia’s Westpac Leading Index shrank for the first in three months in May, slipping -0.2%. The metric is designed to predict The annual rate of decline slowed to -3.9%, the lowest in at least 6 months. Westpac chief economist Bill Evans struck a cautiously optimistic tone following the release, saying “This reading supports the reasonable expectation that we have passed the worst, although the index is still contracting on a six-month annualized basis.” Evans has previously revealed that Westpac expects the economy will shrink 0.6% in the second quarter and contract at an annualized rate of -1.5% through the second half of this year.
Australia has shown tentative signs of stabilization as the government distributed over A$12 billion in cash handouts and committed to A$22 billion for infrastructure projects. The big question going forward is if current momentum can be maintained as the flow of stimulus cash dries up. On balance, the outlook seems far from rosy: the labor market continues to suffer, erecting barriers to a meaningful rebound in domestic demand, while the latest trade data reveals lackluster overseas demand for coal and iron ore, Australia’s top export commodities. Although the Reserve Bank of Australia kept interest rates unchanged at 3% earlier this month, Governor Glenn Stevens noted that there is still “scope for further easing of monetary policy”, identifying credit conditions and the effects of economic weakness on asset quality as “a challenge”.
The Bank of Japan kept interest rates unchanged at 0.10%, as economists expected. Policymakers said that “economic conditions have stopped worsening” and restated expectations that the economy will begin to recover by the second half of the 2009 fiscal year (the six months starting in October). Maasaki Shirakawa and company did qualify their optimism however, saying “uncertainty over the economic outlook is high” and revising their growth projections downward to reflect a -3.4% GDP contraction (versus the previously reported -3.1%) in the 12 months to April 2010. The BOJ also extended standing credit easing measures, saying they will keep current loan collateral practices in place through March of next year versus December and pay interest on bank’s reserves through January 2010 (as opposed to October 2009 as originally planned).
No comments:
Post a Comment