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    Poor data and short-covering extend dollar rout

    USD

    The dollar fell on Wednesday as more negative data weighed.

    The number of new employees added to payrolls in the U.S was less-than-expected in April, at 169k compared to the 200k forecast, according to data from ADP, the largest payroll processor in the the country. The result was also below the 175k in March.

    The poor employment figures were seen as a bad omen ahead of the most significant data event of the week, Non-Farm Payrolls (NFP) on Friday. A poor NFP – after April’s dramatic undershoot – would definitely weigh on the greenback, as it would prove the April figure was not just a blip but possibly representative of a trend, with the side-effect of reigning in monetary policy tightening expectations.

    MBA Mortgage Applications fell by -4.6% in in w/e May 1, from -2.3% in the previous week.

    Non-Farm Productivity came out at -1.9%, in line with expectations, and easing from a -2.1% previous figure.

    Janet Yellen gave a speech on regulation in which she also mentioned that she saw stocks as overvalued.

    EUR

    The euro rose on Wednesday on hopes of a solution being found to the Greek crisis, as well as short-euro position-covering.

    There were reports of much work being done to smooth the way for a deal being made at the meeting of the euro-group and Greek negotiators on May 11.

    There were reports Greek Prime Minister Alexis Tsipras spoke to Jean-Claude Junkers on the telephone about pushing through reforms to pave a way for an agreement. Topics covered, included wages, employment and pension reforms and the outcome was “positive”.

    Elsewhere Greece’s Finmin Varoufakis proved he was still a force after he met Italian Finmin Padoan for talks, which he described as “excellent”, and Padoan said he had great confidence a deal could be struck at the euro-group meeting on Monday.

    The euro shrugged off poor data showing a slow-down in Retail Sales to 1.6% yoy in March from 2.8% previously, when analysts had forecast a lesser fall to 2.4%. Mom data showed a -0.8% fall, which was well below the 0.1% previously.

    GBP

    The pound strengthened on Wednesday as a result of data showing a rise in Services sector activity in April.

    Services PMI increased to 59.5 from 58.9, when it had been expected to fall to 58.5 in April. Composite PMI came out higher at 58.4 than expectations of 58.1 from 58.4 previously.

    Official Reserves in April rose to 325m in April from -924m dollars previously.

    The latest polls for the U.K election tomorrow (Thursday) showed no difference between the two leading parties, further fuelling expectations of a hung parliament and another coalition government.

    JPY

    The yen fell against most currencies except the dollar on Wednesday, which weakened as a result of doubts about the outlook for the U.S economy.

    The yen was the passive partner in most pairs as Japan continued to stay on holiday with Constitution Memorial Day today (Wednesday) after Children’s day yesterday and Greenery Day on Monday.

    Versus the pound it fell as the British currency benefited from up-lifting Services data; and the euro gained on short-covering and hope for a Greek deal.

    Thursday, the yen will be back in action, with Monetary Base data out overnight during the Asian session as well as Services and Composite PMI for April. The BOJ meeting minutes are also released on Thursday.

    USD

    The dollar fell on Wednesday as more negative data weighed.

    The number of new employees added to payrolls in the U.S was less-than-expected in April, at 169k compared to the 200k forecast, according to data from ADP, the largest payroll processor in the the country. The result was also below the 175k in March.

    The poor employment figures were seen as a bad omen ahead of the most significant data event of the week, Non-Farm Payrolls (NFP) on Friday. A poor NFP – after April’s dramatic undershoot – would definitely weigh on the greenback, as it would prove the April figure was not just a blip but possibly representative of a trend, with the side-effect of reigning in monetary policy tightening expectations.

    MBA Mortgage Applications fell by -4.6% in in w/e May 1, from -2.3% in the previous week.

    Non-Farm Productivity came out at -1.9%, in line with expectations, and easing from a -2.1% previous figure.

    Janet Yellen gave a speech on regulation in which she also mentioned that she saw stocks as overvalued.

    EUR

    The euro rose on Wednesday on hopes of a solution being found to the Greek crisis, as well as short-euro position-covering.

    There were reports of much work being done to smooth the way for a deal being made at the meeting of the euro-group and Greek negotiators on May 11.

    There were reports Greek Prime Minister Alexis Tsipras spoke to Jean-Claude Junkers on the telephone about pushing through reforms to pave a way for an agreement. Topics covered, included wages, employment and pension reforms and the outcome was “positive”.

    Elsewhere Greece’s Finmin Varoufakis proved he was still a force after he met Italian Finmin Padoan for talks, which he described as “excellent”, and Padoan said he had great confidence a deal could be struck at the euro-group meeting on Monday.

    The euro shrugged off poor data showing a slow-down in Retail Sales to 1.6% yoy in March from 2.8% previously, when analysts had forecast a lesser fall to 2.4%. Mom data showed a -0.8% fall, which was well below the 0.1% previously.

    GBP

    The pound strengthened on Wednesday as a result of data showing a rise in Services sector activity in April.

    Services PMI increased to 59.5 from 58.9, when it had been expected to fall to 58.5 in April. Composite PMI came out higher at 58.4 than expectations of 58.1 from 58.4 previously.

    Official Reserves in April rose to 325m in April from -924m dollars previously.

    The latest polls for the U.K election tomorrow (Thursday) showed no difference between the two leading parties, further fuelling expectations of a hung parliament and another coalition government.

    JPY

    The yen fell against most currencies except the dollar on Wednesday, which weakened as a result of doubts about the outlook for the U.S economy.

    The yen was the passive partner in most pairs as Japan continued to stay on holiday with Constitution Memorial Day today (Wednesday) after Children’s day yesterday and Greenery Day on Monday.

    Versus the pound it fell as the British currency benefited from up-lifting Services data; and the euro gained on short-covering and hope for a Greek deal.

    Thursday, the yen will be back in action, with Monetary Base data out overnight during the Asian session as well as Services and Composite PMI for April. The BOJ meeting minutes are also released on Thursday.


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