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Dollar falters on Obama comments at G-7

USD

The dollar fell on Monday after President Obama was reported as saying that the strong dollar posed a problem. The White House denied the statement saying the President had made a broader comment about how global demand needed to pick-up and G-7 countries needed to use all instruments to support growth.

On the data front it was a quiet day with only the Labour Market Conditions Index showing a rise of 1.3 in May from -0.5 previously.

As far as the week ahead goes, its not until Thursday’s Advance Retail Sales that things will start to get serious; the data is expected to show a 1.2% rise in May.

EUR

The euro strengthened on Monday after the IMF revised up growth forecasts for Spain – previously one of the worst hit peripheral economies – to 3.1% in 2015, which was higher even than the Spanish government’s 2.9% forecasts. The increased growth was put down to the government’s ambitious employment reforms, as well as a general easing of conditions in the euro-zone.

Other data was also strong, with German Industrial Production rising 0.9% versus the 0.6% expected mom in April, and the German Trade Surplus came in wider-than-forecast at 22.1bn versus the 19.4bn estimate.

Sentiment throughout the euro-area had clearly soured, however, after the Sentix Investor Confidence survey showed a decline to 17.1 from 19.6, when analysts had expected a lesser fall to 18.7. This was not surprising according to Sentix, as uncertainty over the financial future of Greece, higher long-term interest rates and a marginally stronger currency were all seen as factors weighing on confidence.

GBP

The pound fell in most pairs on Monday after it was dogged by uncertainty over the United Kingdom’s place in the European Union, as well as recent negative inflation data which continued to impact on the outlook for monetary policy.

On Monday morning Prime Minister David Cameron had to make a U-turn on comments he made at the G-7 conference last week, when he stated that ministers in his government had to vote for the U.K to remain in a re-negotiated E.U, in an in-out referendum in 2017, instead saying they would be able to vote ‘out’ if they so wished, without jeopardising their ministerial jobs.

Sterling has lost upward momentum recently after a mixture of negative inflation, fears of Brexit and a poor Services PMI result last week hit the U.K’s most important sector. Technically some pairs, such as EUR/GBP have reached key support levels, and there seems to be evidence mounting for a bullish reversal in the overall trend.

JPY

The yen gained momentum Monday morning after Q1 GDP soared way above forecast.

Economic growth in Japan was revised sharply to the upside in the first quarter, underscoring the BOJ’s belief that the recovery was gaining steam. the economy expanded at an annualised 3.9%, overshooting estimates of 2.4% gain and beating median market forecasts of 2.7% growth.

On a quarter-by-quarter basis the economy grew 1.0% higher than the initial estimate of 0.6% and compared with the 0.4% in the previous three month period.

Also household spending rose an annualised 1.5% – remaining unchanged, whilst business inventories added 2.2% to the overall growth compared with a preliminary figure of 2.0%. Meanwhile exports surged 9.9% also in line with preliminary estimates.

“The (GDP) is a pretty positive figure and shows the recovery is picking up pace,” said Takeshi Minami of the Norinchukin Research Institute.

Leveraged traders in Japan have been on the wrong side of the trend, as bets among Japanese individuals for the yen to gain versus the dollar reached 93,038 contracts on May 26th. According to the latest data available from the Tokyo Financial Exchange Inc. Click 365, a market for leveraged trading.

“Leverage traders are acting in a typical contrarian fashion, betting that the recent tumble in the yen has been excessive” said Masakazu Satou of Gaitame Online Co. a retail foreign exchange brokerage in Tokyo.

USD

The dollar fell on Monday after President Obama was reported as saying that the strong dollar posed a problem. The White House denied the statement saying the President had made a broader comment about how global demand needed to pick-up and G-7 countries needed to use all instruments to support growth.

On the data front it was a quiet day with only the Labour Market Conditions Index showing a rise of 1.3 in May from -0.5 previously.

As far as the week ahead goes, its not until Thursday’s Advance Retail Sales that things will start to get serious; the data is expected to show a 1.2% rise in May.

EUR

The euro strengthened on Monday after the IMF revised up growth forecasts for Spain – previously one of the worst hit peripheral economies – to 3.1% in 2015, which was higher even than the Spanish government’s 2.9% forecasts. The increased growth was put down to the government’s ambitious employment reforms, as well as a general easing of conditions in the euro-zone.

Other data was also strong, with German Industrial Production rising 0.9% versus the 0.6% expected mom in April, and the German Trade Surplus came in wider-than-forecast at 22.1bn versus the 19.4bn estimate.

Sentiment throughout the euro-area had clearly soured, however, after the Sentix Investor Confidence survey showed a decline to 17.1 from 19.6, when analysts had expected a lesser fall to 18.7. This was not surprising according to Sentix, as uncertainty over the financial future of Greece, higher long-term interest rates and a marginally stronger currency were all seen as factors weighing on confidence.

GBP

The pound fell in most pairs on Monday after it was dogged by uncertainty over the United Kingdom’s place in the European Union, as well as recent negative inflation data which continued to impact on the outlook for monetary policy.

On Monday morning Prime Minister David Cameron had to make a U-turn on comments he made at the G-7 conference last week, when he stated that ministers in his government had to vote for the U.K to remain in a re-negotiated E.U, in an in-out referendum in 2017, instead saying they would be able to vote ‘out’ if they so wished, without jeopardising their ministerial jobs.

Sterling has lost upward momentum recently after a mixture of negative inflation, fears of Brexit and a poor Services PMI result last week hit the U.K’s most important sector. Technically some pairs, such as EUR/GBP have reached key support levels, and there seems to be evidence mounting for a bullish reversal in the overall trend.

JPY

The yen gained momentum Monday morning after Q1 GDP soared way above forecast.

Economic growth in Japan was revised sharply to the upside in the first quarter, underscoring the BOJ’s belief that the recovery was gaining steam. the economy expanded at an annualised 3.9%, overshooting estimates of 2.4% gain and beating median market forecasts of 2.7% growth.

On a quarter-by-quarter basis the economy grew 1.0% higher than the initial estimate of 0.6% and compared with the 0.4% in the previous three month period.

Also household spending rose an annualised 1.5% – remaining unchanged, whilst business inventories added 2.2% to the overall growth compared with a preliminary figure of 2.0%. Meanwhile exports surged 9.9% also in line with preliminary estimates.

“The (GDP) is a pretty positive figure and shows the recovery is picking up pace,” said Takeshi Minami of the Norinchukin Research Institute.

Leveraged traders in Japan have been on the wrong side of the trend, as bets among Japanese individuals for the yen to gain versus the dollar reached 93,038 contracts on May 26th. According to the latest data available from the Tokyo Financial Exchange Inc. Click 365, a market for leveraged trading.

“Leverage traders are acting in a typical contrarian fashion, betting that the recent tumble in the yen has been excessive” said Masakazu Satou of Gaitame Online Co. a retail foreign exchange brokerage in Tokyo.



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