By FXEmpire.com
Analysis and Recommendations:
The EUR/USD climbed today, as nothing positive happened to support the euro. Most of the move could be on negativity towards the USD, as gold jumped up again today. The EURUSD are trading at 1.2492
The ECB held its benchmark interest rate at 1%, defying expectations that it would cut rates amidst a challenging Eurozone-wide growth environment and very tight financial conditions. Euro is trading higher against the USD and German government bond yields are very slightly higher. Markets were trading positively heading into the decision. Equities traded higher across the Eurozone and the UK, and futures are indicating a higher open in North America. US treasuries are 1-2bps higher across the curve as are Canadian government bonds.
Commodities are bid, with both crude and gold higher, and the commodity-linked currencies are higher as well (although that is somewhat linked to domestic factors, including very strong Australia GDP data released overnight). Spanish and Italian government bond yields are bid across their respective government curves as the press is brimming with speculation about the possibility of ESM funds being tapped for a bailout of the Spanish banking system. Spanish authorities yesterday implied that they would be open to a bailout of their country’s banking system under the auspices of a common EU banking regulator. Comments from European government officials have been unsurprisingly mixed: statements by French officials imply that France is open to the possibility; German politicians are highly opposed to it and would prefer that the Spanish government apply to the ESM through the established mechanisms, etc. In any event, we don’t think that progress will be made one way or the other until the the EU summit due to take place on June 28-29. That summit will occur following the Greek elections, so the entire picture ought to be clearer at that stage.
The ECB left interest rates on hold at 1.0%. At the press conference President Draghi did nothing, but reminded markets that beyond liquidity and rates, the burden has shifted from the central bank to the government level, beginning with the fiscal compact.
Negative European developments since yesterday’s North American close include: 1) Moody’s cut the ratings on several German and Austrian banks, providing evidence that there is leakage into the core. 2) The Spanish banking sector needs to be recapitalized, but the source of the funds is still unknown. Germany is adamant that any aid should be attained through traditional uses of EFSF/ESM and not through a direct injection; mainly due to subordination of equity under sovereign debt issues; 3) Greece warns again that without the additional EUR1bn in aid that is dependent on the election result, it will run out of money. 4) German industrial production dropped -2.2%m/m in April, while Eurozone GDP growth in Q1 was confirmed at 0.0% q/q
FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports
Economic Data for June 6, 2012 actual v. forecast
|
Date |
Time |
Currency |
Event |
Actual |
Forecast |
Previous |
|
Jun. 06 |
02:30 |
AUD |
GDP (QoQ) |
1.3% |
0.5% |
0.6% |
|
10:00 |
EUR |
GDP (QoQ) |
0.0% |
0.0% |
0.0% |
|
|
11:00 |
EUR |
German Industrial Production |
-2.2% |
-1.0% |
2.2% |
|
|
12:45 |
EUR |
Interest Rate Decision |
1.00% |
1.00% |
1.00% |
|
|
13:30 |
USD |
Nonfarm Productivity (QoQ) |
-0.9% |
-0.7% |
-0.5% |
|
|
13:30 |
USD |
Unit Labor Costs (QoQ) |
1.3% |
2.2% |
2.0% |
Upcoming Economic Events that affect the CHF, EUR, GBP and USD
|
Date |
Time |
Currency |
Event |
Forecast |
Previous |
|
Jun 7 |
7:00 |
CHF |
Foreign Currency Reserves |
235.6B |
|
|
7:15 |
CHF |
CPI m/m |
0.1% |
||
|
8:30 |
GBP |
Services PMI |
53.3 |
||
|
TBD |
EUR |
French 10-y Bond Auction |
|||
|
11:00 |
GBP |
Asset Purchase Facility |
325B |
||
|
11:00 |
GBP |
Official Bank Rate |
0.50% |
0.50% |
|
|
TBD |
GBP |
MPC Rate Statement |
|||
|
12:30 |
USD |
Unemployment Claims |
383K |
||
|
14:00 |
USD |
Fed Chairman Bernanke Testifies |
|||
|
Jun 8 |
8:30 |
GBP |
PPI Input m/m |
-1.5% |
|
|
8:30 |
GBP |
Consumer Inflation Expectations |
3.5% |
||
|
TBD |
GBP |
10-y Bond Auction |
|||
|
12:30 |
USD |
Trade Balance |
-51.8B |
||
|
14:00 |
USD |
Fed Chairman Bernanke Testifies |
Government Bond Auctions
Date Time Country
Jun 07 00:30 Japan
Jun 07 08:30 Spain
Jun 07 08:50 France
Jun 07 09:10 Sweden
Jun 07 15:00 US
Jun 08 10:00 Belgium
Jun 08 15:30 Italy
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Originally posted here
