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Currencies rise and fall as Greek rollercoaster continues without end

USD

The dollar traded mixed on Friday, gaining ground after positive data, but then giving back those gains slowly during a day of subdued trading.

The greenback was supported by firmer Producer Prices and a higher-than-expected result in a key Consumer Confidence survey, which continued to feed speculation the Fed was moving closer and closer to making a rate hike.

Producer Prices – otherwise known as Factory Gate prices – edged up in May, coming out at 0.5% mom against -0.4% previously, and beating analysts estimates of a 0.4% rise.

Year-on-year they came out at -1.1% which was in line with estimates, and a slight improvement on the 1.3% previously.

Core CPI (Ex food, energy and trade), however, dipped, falling -0.1% mom in May from 0.1%, when it had been forecast to remain the same; and standing at 0.6% yoy from 0.8% previously, when it had been expected to show a 0.7% increase.

The dollar gained more lift after the release of the University of Michigan Sentiment survey, revealed an upsurge in sentiment to 94.6 from 90.7 previously, when it had been forecast to increase to a lesser 91.4 in June (according to a preliminary estimate).

EUR

With a decided lack of hard data on Friday, the single currency was moved, more by news impacting on its counterparts as well reports of the numerous shenanigans surrounding Greece’s attempt to broker a cash-for-reform deal with international creditors.

Surprisingly enough the currency managed to stay reasonably robust, albeit within a lengthy range, after it rose on comments from Greek officials that negotiators were only days away from closing a deal; and that teams of negotiators from Athens would be going to Brussels tomorrow to continue talks on reforms.

Gains were offset, however, by less favourable reports which such as those from German newspaper Bild which reported a story about the German government preparing policies for what to do in a Greek default scenario.

Other news also suggested the two sides could not bridge the gap dividing them: after it was claimed, for example, that the creditor institutions supplied an updated list of proposals on Tuesday, which were rejected by Greece almost immediately, because it claimed the proposals were no different from previous presentations.

Yesterday the IMF team quit the negotiating table altogether and returned to Washington after Greece refused to budge on the issue of pension cuts. The Greek government has repeatedly said there are “red lines” over which it will not ‘cross’.

Despite increasing fears of a default and poor data the euro managed to edge up on Friday. Industrial Production data gave no succour to the currency, after it showed only a 0.8% rise versus the 1.1% forecast, and below the 2.1% of the previous reporting period.

GBP

The pound rose on Friday after Construction data came out higher-than-expected, and a change in the way the Office of National Statistics calculates construction output led to a recalculation of GDP which implies significantly higher than previously reported growth for the U.K economy overall – in both 2014 and Q1 of 2015.

Construction Output rose by 1.5% yoy in April, easily beating expectations of 0.5%; whilst mom it contracted by -0.8% in April, undershooting the 1.1% forecast.

The currency was also boosted by commentary from BOE voting member Ian McCafferty who said that economic conditions were moving closer to a state that would warrant an increase in interest rates. Although McCafferty is known as one of the more hawkish members of the MPC he has recently voted in unison with other members to maintain low rates – however traders may look for a change in his voting after this most recent statement, and budding dissent could pressure sterling higher.

JPY

The yen was trading marginally higher on Friday morning in the Asian session and dip buying following the unwinding of short yen positions became the main source of dollar demand as investors sought to take advantage of Governor Kuroda’s comments.

In a statement the Japanese government and central bank officials tried to assure the markets the Governor’s remarks were not part of a concerted effort by Tokyo to check the currency’s decline. By late in the New York session on Friday the yen was trading at 123.40 per dollar.

Earlier in the day data on Japan’s industrial production was released showing a rise mom of 1.2% in April compared to an increase of 1.0% registered in the previous month. Meanwhile the nation’s tertiary industry index eased 0.2% on a monthly basis in April, reversing market expectations for a 0.4% advance.

Going forward the BOJ’s monetary policy statement will fetch a lot of attention from the markets, scheduled for release next week.

USD

The dollar traded mixed on Friday, gaining ground after positive data, but then giving back those gains slowly during a day of subdued trading.

The greenback was supported by firmer Producer Prices and a higher-than-expected result in a key Consumer Confidence survey, which continued to feed speculation the Fed was moving closer and closer to making a rate hike.

Producer Prices – otherwise known as Factory Gate prices – edged up in May, coming out at 0.5% mom against -0.4% previously, and beating analysts estimates of a 0.4% rise.

Year-on-year they came out at -1.1% which was in line with estimates, and a slight improvement on the 1.3% previously.

Core CPI (Ex food, energy and trade), however, dipped, falling -0.1% mom in May from 0.1%, when it had been forecast to remain the same; and standing at 0.6% yoy from 0.8% previously, when it had been expected to show a 0.7% increase.

The dollar gained more lift after the release of the University of Michigan Sentiment survey, revealed an upsurge in sentiment to 94.6 from 90.7 previously, when it had been forecast to increase to a lesser 91.4 in June (according to a preliminary estimate).

EUR

With a decided lack of hard data on Friday, the single currency was moved, more by news impacting on its counterparts as well reports of the numerous shenanigans surrounding Greece’s attempt to broker a cash-for-reform deal with international creditors.

Surprisingly enough the currency managed to stay reasonably robust, albeit within a lengthy range, after it rose on comments from Greek officials that negotiators were only days away from closing a deal; and that teams of negotiators from Athens would be going to Brussels tomorrow to continue talks on reforms.

Gains were offset, however, by less favourable reports which such as those from German newspaper Bild which reported a story about the German government preparing policies for what to do in a Greek default scenario.

Other news also suggested the two sides could not bridge the gap dividing them: after it was claimed, for example, that the creditor institutions supplied an updated list of proposals on Tuesday, which were rejected by Greece almost immediately, because it claimed the proposals were no different from previous presentations.

Yesterday the IMF team quit the negotiating table altogether and returned to Washington after Greece refused to budge on the issue of pension cuts. The Greek government has repeatedly said there are “red lines” over which it will not ‘cross’.

Despite increasing fears of a default and poor data the euro managed to edge up on Friday. Industrial Production data gave no succour to the currency, after it showed only a 0.8% rise versus the 1.1% forecast, and below the 2.1% of the previous reporting period.

GBP

The pound rose on Friday after Construction data came out higher-than-expected, and a change in the way the Office of National Statistics calculates construction output led to a recalculation of GDP which implies significantly higher than previously reported growth for the U.K economy overall – in both 2014 and Q1 of 2015.

Construction Output rose by 1.5% yoy in April, easily beating expectations of 0.5%; whilst mom it contracted by -0.8% in April, undershooting the 1.1% forecast.

The currency was also boosted by commentary from BOE voting member Ian McCafferty who said that economic conditions were moving closer to a state that would warrant an increase in interest rates. Although McCafferty is known as one of the more hawkish members of the MPC he has recently voted in unison with other members to maintain low rates – however traders may look for a change in his voting after this most recent statement, and budding dissent could pressure sterling higher.

JPY

The yen was trading marginally higher on Friday morning in the Asian session and dip buying following the unwinding of short yen positions became the main source of dollar demand as investors sought to take advantage of Governor Kuroda’s comments.

In a statement the Japanese government and central bank officials tried to assure the markets the Governor’s remarks were not part of a concerted effort by Tokyo to check the currency’s decline. By late in the New York session on Friday the yen was trading at 123.40 per dollar.

Earlier in the day data on Japan’s industrial production was released showing a rise mom of 1.2% in April compared to an increase of 1.0% registered in the previous month. Meanwhile the nation’s tertiary industry index eased 0.2% on a monthly basis in April, reversing market expectations for a 0.4% advance.

Going forward the BOJ’s monetary policy statement will fetch a lot of attention from the markets, scheduled for release next week.



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