By GCI Fx Research
€
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3460 level and was capped around the US$ 1.3650 level. Data released in the U.S. today saw April headline consumer price inflation unchanged m/m and off 0.7% y/y while the ex-food and energy component was up 0.3% m/m and 1.9% y/y. The slide in year-over-year CPI was the largest decline in 54 years. Also, April headline retail sales were off 0.4% m/m and off 10.1% y/y while the ex-autos component was off 0.5% m/m and 7.7% y/y. Other data saw March business inventories off 1.0% m/m and 4.8% y/y while March business sales were off 1.6% m/m and 15.6% y/y. Additionally, mid-May University of Michigan consumer sentiment improved to 67.9 from 65.1 in April. Moreover, it was reported that April industrial production was off 0.5% m/m while capacity utilization shrank to 69.1%. In eurozone news, European Central Bank member Provopoulos pessimistically reported “…the exit from this most unfavorable international economic situation will be neither easy nor quick…Still substantial effort will be necessary given that the interest rate cuts have not been fully translated into lower borrowing rates for households and businesses.” The ECB reported it is not currently prepared to accept government bonds from central and eastern European governments as collateral for refinancing operations. Data released in the eurozone saw EMU-16 April consumer price inflation rise 0.4% m/m and 0.6% y/y while German Q1 GDP was off 3.8% q/q. Moreover, EMU-16 GDP was off 2.5% q/q and 4.6% y/y. Euro bids are cited around the US$ 1.2765 level.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥94.75 level and was capped around the ¥96.20 level. The pair reached its lowest level since 20 March as risk aversion again ruled the market. Data released in Japan overnight saw March core machinery orders off 1.3% m/m while the April domestic corporate goods price index was off 0.4% m/m and off 3.8% y/y. Democratic Party of Japan finance spokesman Nakagawa reported the U.S. government should issue yen-denominated bonds, a policy that would see Japan continue to purchase U.S. assets but also weaken the greenback. The Japanese media yesterday reported the government is likely to upgrade its assessment of the economy. The Nikkei 225 yesterday stock index lost 2.64% today to close at ¥9,093.73. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-à-vis the yen as the single currency tested offers around the ¥127.95 level and was capped around the ¥131.15 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥143.55 level while the Swiss franc moved higher vis-à-vis the yen and tested bids around the ¥84.50 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8215 in the over-the-counter market, down from CNY 6.8250.
Daily Market Commentary provided by GCI Financial Ltd.
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