USDINR- Will open down or Flat
EURINR- Will open Flat
GBPINR- Will open down
JPYINR- Will open up
Markets remained nervous ahead of Sunday's Greek election. There was little fresh news from Europe, Greece's anti-austerity party leader again calling Germany's bluff by saying he intends reneging and renegotiating the existing bailout's terms if elected, believing the Eurozone wishes to avoid a Greek exit. In the US, economic data (retail sales, PPI) disappointed, helping the S&P500 flip from being up 0.5% to being down 0.8% (currently). Commodities were weaker, the CRB index down 0.6%, oil -1.0%, copper -0.5%, but gold acting as a safe haven since mid-May up 0.5%. US 10yr treasury yields reversed during the London morning from 1.70% to 1.59% by the NY afternoon. The 10yr auction went well at 1.622% - an auction record – and with an average 3.1 bid-cover ratio. Spanish and Italian 10yr yields remained close to their recent highs, and the German 10yr – previously considered a safe haven – gapped 11bp higher to 1.53%, possibly reflecting concern regarding Germany's exposure to the Eurozone or tweaked Skandinavian pension fund rules.
The US dollar index (DXY) shed around 0.5%. EUR rose from 1.2500 to 1.2610 but reversed early NY to 1.2570. USD/JPY fell sharply around midday London from 79.75 to 79.30 ahead of the BOJ meeting which starts today. AUD ground higher in London from 0.9940 to 1.0003 and reversed with US equities to 0.9945. NZD ground up to 0.7810 before slumping in NY to 0.7750. AUD/NZD firmed from 1.2790 to 1.2830, possibly reflection caution ahead of this morning's RBNZ meeting.
Economic wrap
US retail sales down 0.2% in May. Although auto sales rose 0.8%, there was broad-based weakness in many May retail components including discretionary spending like DIY, health/personal care, sports goods and restaurants. Along with downwards revisions to April, the first back to back retail falls in two years paint a softer consumer spending picture in Q2 than in Q1. Separately, business inventories rose 0.4% in Apr, the new information in the report being a 0.6% rise in retail stocks.
US producer output prices down 1.0% in May. Gasoline prices slumped 8.9%, food was down 0.6% but the core PPI rate rose an on trend 0.2%, with a rise in auto prices off set by falling light truck prices. Intermediate and crude PPI prices also fell, on both total and core definitions.
Euroland industrial production fell 0.8% in April, its 7th decline in 8 months, for a –2.3% yr annual pace of decline, its weakest since 2009. The national detail showed Germany down 2%, Spain down 0.7%, Italy down 1.9% but France up 1.5%.
