Market's Expectation Today(05/06/2012)

USDINR- Will open down 


EURINR-Will open up


GBPINR- Will open Flat


JPYINR- Will open Flat

Markets stabilised following hints European policymakers are at least considering steps to strengthen the Eurozone's structure. The WSJ reported Germany was now open to discussing a roadmap to fiscal union which it considers a pre-requisite to joint bond issuance - a significant shift in stance. ECB council member Nowotney added: 'ideas of a European banking union are certainly right but will need significant time to be realised'. The IMF/EU/ ECB group released Portugal's next bailout tranche, helping market tone. The Eurostoxx 50 closed up 0.5%, although the S&P500 made a fresh five-month low and is currently down 0.2% thanks to a disappointing US factory orders report. Commodities rebounded from 20-month lows, the CRB index +0.6%, oil +1.0%, copper +0.5%, but gold -0.3%. Bonds took a positive view if events - US 10yr treasury yields bouncing off yesterday's record low of 1.44% to 1.53%, helping Australia's 10yr yield rise 7bp. Spain's 10yr shed 12bp.

The US dollar index (DXY) corrected lower. EUR took heart from Germany's apparent softening stance and extended yesterday's rise from 1.2400 to 1.2510, only briefl y disturbed by evidence the ECB had not intervened in the Eurozone bond markets during the previous turbulent week. USD/JPY rose from 78.00 and 78.40. AUD rose from 0.9650 to 0.9747 before the US data and US equities constrained it to a 0.9700-0.9740 range. NZD rose from 0.7515 to 0.7595 before stalling. AUD/NZD initially fell to 1.2820 and then firmed to 1.2850.

Economic wrap

US factory orders fell 0.6% in April, with a 1.1% drop in ex-transportation orders. The drop in non-durables was at least partly price-driven, including a 4.4% drop for petroleum. The already-published durables component was revised down slightly from +0.2% to fl at, with a bounce in cars off setting a sharp drop in aircraft orders.

Eurozone Sentix confidence index fell from -24.5 to -28.9 in June, the lowest reading since July 2009. Expectations fell the most, but only back to January levels; current conditions continued a slide that began in early 2011