Releases from Europe: May Forecast Actual
Italian Bloomberg Retail PMI 31.4 (prior) 38.8
French Bloomberg Retail PMI 46.2 (prior) 59.6
German Bloomberg Retail PMI 44.6 (prior) 56.6
Euro-zone Bloomberg Retail PMI 41.8 (prior) 53.1
Euro-zone Business Climate Indicator 0.41 0.54
Euro-zone Consumer Confidence - 12.0 - 15.0
Euro-zone Economic Confidence +96.8 +97.1
Euro-zone Industrial Confidence - 2.0 - 2.0
Euro-zone Services Confidence +7.0 +8.0
U.K. CBI Distributive Trade Report - 20.0 - 14.0
Releases from the States:
Q1 Forecast Actual
U.S. GDP Annualized (QoQ) +0.9% +0.9%
U.S. Personal Consumption (QoQ) +1.0% +1.0% May
U.S. Initial Jobless Claims (24th) 370K 372K
U.S. Continuing Claims (17th) 3080K 3104K
Yesterday was a day most would have not predicted given the surprising strength in the European releases, the modestly better (but still weak) U.S. GDP and the relentless rise in continuing claims.
What is more Bernanke repeated statements from a few weeks ago that “at this stage conditions in financial markets are still far from normal.” He confirmed that the Fed's interventions have helped and resulted in narrower credit spreads. However, he also pointed out that some securitization markets are “moribund,” and risk spreads are elevated as are term LIBOR spreads. Given any foresight that these would be released the market would normally have sold the Dollar with vengeful glee. That the opposite occurred has the market searching for reasons. Some point out the pullback in oil prices but the Dollar/oil correlation is so erratic it serves a purpose only when it fits and commentators are struggling for other reasons to quote. Some suggest the growing concerns over inflation are hitting treasury prices and will force the long end of the curve higher which will attract funds back into the Dollar. Certainly the signs are that the Fed’s burst of easing is probably over and that is causing the market to reappraise the possibility of interest rate hikes. Technically, while the short term was uncertain Dollar cycles were definitely pointing to a recovery and it certainly seems possible that we have seen the low for now – and probably for the rest of the year. The only uncertainty is whether we enter into further range trading for a month or so before a stronger push higher is seen by the Greenback. While economic numbers from the States are improving they are still not of sufficient strength to warrant a stronger rally and this does put the weighting more on the side of continued range trading. Month end provides another rash of numbers from Japan and if recent history serves as a forecast then we can expect further softness that should the Yen to soften over the coming week. Meanwhile, further unwinding of Dollar short positions is likely but a bemused market may well be forced to tread carefully today.
More later once the daily analysis has been done…
The following releases are due from Asia due today: Australia
Private Sector Credit (MoM) +0.8%
Private Sector Credit (YoY) 14.5% Japan - April
Unemployment Rate 3.9%
Jobs-to-Applicant Rate 0.94
Household Spending (YoY) - 0.7%
Industrial Production (MoM) - 0.5%
Industrial Production (YoY) +1.6%
National CPI (YoY) +0.9%
National CPI ex food & energy (YoY) +0.0%
Vehicle Production (YoY) +2.3% (prior)
Housing Starts (YoY) -11.8%
Annualized Housing Starts 1.111mn
Construction Orders (YoY) -16.0% Japan - May
Nomura/JMMA Manufacturing PMI 48.6 (prior)
Tokyo CPI (YoY) +0.8%
Tokyo CPI ex food & energy (YoY) +0.0% U.K.
GfK Consumer Confidence - 25.0
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