Today’s data from the US has showed signs of a bounce back in the US economy following ‘transitory factors,’ which resulted in the lacklustre releases throughout Q1, with weekend comments from Fed’s Fisher highlighting that the timing of a rate increase will be determined by data and not by date. The strong slew of US data in the form of (US Consumer Confidence Index (May) M/M 95.4 vs. Exp. 95) US Services PMI (May P) M/M 56.4 vs. Exp. 56.5 (Prev. 57.4) US New Home Sales (Apr) M/M 517K vs. Exp. 508K, US Durable Goods Orders (Apr) M/M -0.5% vs Exp. -0.5%)) cemented the Fed’s rhetoric that they expect the period of weak US data to pass, which helped the USD/JPY to print fresh 8 year highs.
Today’s session has been dominated by news filtering out of Greece from over the weekend, with concerns mounting that the country will be unable to pay their IMF debts due in June after weekend comments from Greek Interior Minister Voutsis. However, Greek government spokesman Sakellaridis said Greece will make its debt repayments, but wants a deal by end-May or early June, and has not asked for a bailout extension. As many European participants come back to their desks after a long weekend, the ongoing uncertainty regarding Greece has weighed on EUR/USD, which is substantially weaker and fell to four week lows consolidating below the 1.0900 handle, while EUR/GBP declined to 2 and a half month lows. Meanwhile, the USD-index has pressured GBP/USD as the pair is lower by over a point.
Looking ahead tomorrow sees the release of the BoJ meeting minutes, BoC Rate Decision, US API Crude Inventories and comments from Fed's Lacker (Voter, Hawk), ECB's Draghi (Soft Dove), ECB's Coeure (Dove).