US Morning Notes – USD lower, China denies report of plan to sell EUR

by Forex Trading HQ on August 2, 2010

in North America Forex Report

FX Highlights

  • The USD is trading lower as equity markets rally, the EUR is supported by report that China denied that it is reconsidering its EUR bond holdings, the EUR sold off hard in the US trading session Wednesday in reaction to a Financial Times report which suggested that China may review its EUR holdings, the Chinese denial that it is reviewing its EUR holdings helped reduce some fear of the risk of contagion from the EU debt crisis, China says that Europe is a key investment market and report of review of EUR holdings groundless, GBP trades higher despite report of weaker than expected UK retail sales, commodity currencies trade higher tracking firmer equity and commodity markets with AUD supported by report that the RBA may soon resume tightening of monetary policy, JPY trades lower as risk appetite improves and Japans export sales slow
  • Focus turns to today’s release of US initial jobless claims and revised Q1 GDP
  • The Financial Times says China may review its EUR holdings, it is estimated that China holds €650bln, the article says China may not sell EUR but could increase holdings of other currencies, A Chinese official says FX diversification objective will not change, ECB‘s Nowotny says EUR depreciation is a positive development, EUR higher
  • Japan’s April trade surplus widened to ¥742.3bln, exports rise by 40.4%, exports rise by 24.2%,JPY lower
  • Australia’s Q1 CAPEX falls 0.2%, a press report says that the RBA is close to resuming its tightening policy, AUD higher
  • UK May CBI retail sales at -18 compared to +13 last month, reading of +12 was expected, GBP higher
  • Swiss Q1 nonfarm payrolls rose 0.1%,CHF higher
  • US five year bond auction yield declined to 13 month low
  • CBO says the stimulus plan has created between 1.2 and 2.8mln jobs
  • The New York Times reports that the EU debt crisis could slow US recovery, Fed’s Bullard says contagion from the EU debt crisis to the US economy looks unlikely and the crisis should be contained by US and Asian growth, senior White House economics adviser Romer warns that sudden budget cuts could hurt the recovery
  • US equity markets set to open sharply higher, European equities 2% higher, Nikkei closed 117 points higher

Upcoming Events

  • US-Thursday, initial jobless claims for week ending 05/22 will be released expected at 455k compared to 471k last week along with revised Q1 GDP expected at 3.4%
  • CAN-Thursday, no major Canadian economic data is due for release today

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