marctomarket.com / By Marc Chandler / Friday, June 28, 2013
Reassuring words from a number of Federal Reserve officials, continued easing of the acute liquidity squeeze in China and mostly firm data in Europe has seen global equity and bond markets general trading higher, but in the foreign exchange market the dollar has retained the underlying firm tone seen this week. Generally speaking, we anticipate a modestly softer dollar in the coming days.
The euro traded above yesterday’s high in Asia and early Europe, but stalled in front of Wednesday’s high just shy of $1.31. Sterling is trading in the lower end of yesterday’s ranges. The Australian dollar slipped through yesterday’s lows, though remains almost a cent above the multi-year low seen at the start of the week just below $1.09150. Follow through buying from the key reversal on Monday has been disappointing. The weakest currency ahead of the weekend, though is the Japanese yen. The dollar is trading near 3 week highs, just above JPY99.00.
A slew of Japanese data mostly surprised on the upside. The manufacturing PMI rose to 52.3 in June, a two year high. Industrial output for 2.0%. The market expected only a 0.2% increase. Retail sales rose 0.8% in year-over-year in May, recovering from the 0.2% decline in April. The pace of deflation in the national CPI (May) was halved to 0.3% from 0.7%, though the Tokyo figures for June was flat year-over-year, which is its best reading in almost two years. Excluding food and energy though, Tokyo CPI stood at -0.4% from -0.3% in May, warning that deflation forces have not been overcome yet. Japan’s Tankan survey is out first thing Monday in Tokyo and is widely expected to show improvement.
Thanks to BrotherJohnF