JPYINR- will open Up
Weaker US data gave the bulls some hope of Fed stimulus. Headline CPI was slightly below expectations, the annual rate of 1.7% below the Fed’s 2.0% target, although the core level (2.3%) should temper expectations of next week’s FOMC. Jobless claims also rose . There was little news flow otherwise, Greek election predictions the dominant feature. Greece’s stockmarket rose 10.1% on expectations the Eurozone-friendly parties would govern, and the S&P500 is currently up 0.6%. The CRB commodities index is up 1.0% (oil +1.3%, copper +0.3%, and gold 0.2%). US 10yr treasury yields were stuck in a 1.59%- 1.64% range.
The US dollar index (DXY) probed slightly lower. EUR was fi rmer from 1.2543 to 1.2618. ECB member Nowotny denied another LTRO was in the works. USD/ JPY fell from 79.40 to 79.16 before recovering to 79.30. AUD pushed higher from 0.9922 to 0.9996. NZD rose from 0.7754 to 0.7823. AUD/NZD broke below 1.2800 to 1.2770 – a fresh two-month low
Economic wrap
US CPI down 0.3% in May, with energy down 4.3%, food prices flat and the core rate up 0.2% for the third month running. The annual pace of the CPI was just 1.7% yr, its lowest since early last year, although the core annual pace of 2.3% yr is just below the 2.4% yr four year high recorded in April. US current account defi cit widened from $118.7bn to $137.3bn in Q1, the largest quarterly defi cit since late 2008.
US initial jobless claims up 6k to 386k in the week ended 9/6. There is now a clear claims uptrend in place since mid Feb, consistent with other measures of the jobs market which have weakened since then.
Canadian new house prices up 0.2% in Apr, for a 2.5% yr annual pace. A separate report showed capacity utilisation up from 80.5% to 80.7% in Q1, its highest since late 2007.
Euroland CPI confi rmed at 2.4% yr in May, unrevised from the flash estimate. The core rate was steady at 1.6% yr in May, little changed since Sep last year
