Overview
After a fairly choppy start to the day, USD ends the European session relatively flat, driven higher once US participants began arriving at their desks, with better than expected Pending Home Sales (M/M 3.4% vs. Exp. 0.9%, Prev. 1.1%, Rev. 1.2%) a catalyst for further strength. The notable data from the European morning saw UK GDP (0.3% vs. Exp. 0.4%, Prev. 0.3%) weigh on GBP/USD, seeing the pair fall firmly below the 1.5300 handle for the first time since the UK elections earlier this month. EUR sentiment continues to focus around the Greek situation, with participants no closer to knowing whether a deal will be made before Greece’s first June instalment of IMF payments is made on June 5th. Comments continued to filter out throughout the day, coinciding with the G7 meeting which has taken place over the past 2 days. Given the repetitive nature of the conference, with Greek sources suggesting a deal is close and Eurogroup officials stating negotiations are still necessary before a deal can be agreed, seeing EUR/USD end the session unchanged.
Elsewhere, the antipodes have seen weakness throughout the day following Australian Q1 capex, which recorded its worst decline since 2009, prompting a sell-off across AUD/USD as the pair broke back below 0.7700. NZD weakened in sympathy, as NZD/USD gave back yesterday’s post-Fonterra 2015/16 milk payout inspired gains where the group struck an overall upbeat tone.
Finally, USD/JPY rose to print its highest level since Dec’02 during Asia hours, after tripping stops at the 2007 high (124.14) in continuation of yesterday’s gains, with macro funds also said to be buying in the pair. The pair then went on to continue to gain strength when European and then US participants came to market, reaching highs of 124.46.
Looking ahead, tomorrow sees a fairly busy end of the week, with highlights including Japanese jobless rate and CPI, US GDP secondary reading, Chicago Purchasing Manager Index, University of Michigan Sentiment Final reading and Canadian GDP, as participants also look out for comments from ECB’s Mersch as well as OPEC regarding oil outlook after they meet in Switzerland.