USDINR- Will open down
EURINR- Will open down
GBPINR- Will open flat or down
JPYINR- Will open flat or down
Market wrap
Markets flipped back to a less risk averse tone last night. The news flow was of only moderate importance but mostly positive. Following yesterday's comments from Fed dove Evans allowing for global policy coordination, voting centrist Lockhart said stimulus options should remain on the table, keeping alive market expectations of the Fed. The ECB, in its Financial Stability Review, endorsed the European Commission's proposal to guarantee European bank deposits. Rumours circulated that the ECB has intervened in the peripheral bond markets. Fitch rating agency provided some off set to the above, downgrading 18 Spanish banks in the wake of its recent sovereign move, and commenting the country will probably miss its budget deficit targets.
The S&P500 is currently up 0.7%, and the CRB commodities index is up 0.1% (oil +0.9%, copper unchanged, gold +0.8%). US 10yr treasury yields ground higher from 1.59% to 11.66%. The 3yr auction went well (3.5 bid-cover vs 3.4 average). The slightly improved sentiment did not extend to Eurozone peripherals, though: Spain's 10yr rose 31bp to an all-time high of 6.83%, and Italy rose 27bp to 6.30% - a five-month high.
The US dollar index (DXY) was range-bound. EUR was similarly consolidative inside 1.2440-1.2530, currently at 1.2505. USD/JPY chopped around inside 79.37 and 79.70. AUD ground high in hesitant fashion, from 0.9880 to 0.9940. NZD similarly ground from 0.7705 to 0.7772. AUD/NZD broke below the key 1.2815 to 1.2775, targeting 1.2600 during the weeks ahead
Economic wrap
US NFIB small business optimism down slightly from 94.5 to 94.4 in May. However some of the detail was positive, including a further gain from 5 to 6 in the intention to hire index, up from 0 in April.
US import prices fell 1.0% in May, due mainly to a 4.2% fall in petroleum prices. Food prices also fell but ex food/fuel prices were flat. Exports prices fell 0.4% in May.
US IBD-TIPP economic optimism down from 48.5 to 46.7 in June, driven my lower readings for the economic outlook, federal policies and to a lesser extent the personal financial outlook.
Fedspeak. Known dove Charles Evans of the Chicago Fed said he would support a range of measures to generate faster jobs growth.
UK industrial production flat in April, with factory output down 0.7% but utilities surging 13.6% after March's mild weather turned miserable in April. In other news, the RICS house price balance improved from –19% to –16% in May, about where it was at the start of the year, and less pessimistic than in early 2011.
Spanish bank downgrades. The credit ratings of 18 Spanish banks were cut by Fitch today. Spanish govt 10 yr bond yields hit new highs today at over 6.75%, with Italy on 6.25% and Germany 1.40%. Fitch said other eurozone country ratings, including the AAA nations', were at risk
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