Daily FX Update, 15 May 2015 OVERNIGHT MARKET UPDATE:

·         US initial jobless claims were little changed at 264k, but the four week moving average declined further to 272k – a new 15-year low. These data are consistent with ongoing solid growth in non-farm payrolls and further declines in the unemployment rate in near term.  

·         The US April producer prices report disappointed market expectations on both the headline and core measures. The headline data recorded a surprise 0.4% m/m decline against market expectations of a 0.1% m/m rise and was 1.3% lower over the year. The core measure fell 0.2% m/m, with the annual pace of growth moderating to 0.8% from 2.1% in December 2014.

·         In euro area, ECB Governor Draghi remained on message, reiterating in a speech at the IMF, that the expanded asset purchase program would remain in place “as long as needed for its objective to be fully achieved on a truly sustained basis”. While he acknowledged that the program has been more “potent” than many people expected, the euro area economy was not out of the woods.  

·         The night was mostly one of consolidation in the currency market with AUD and NZD giving back some of yesterday’s gains. Notably though the EUR continues to drive higher, and US data remain both strong (jobless) and cautious (PPI).      

·         Weaker than expected US producer price data helped fuel doubt as to the need for Fed hikes, helping the move lower in yields across the curve.         

·         After a week of falls, major US bourses up around 1%, with overnight data (benign producer prices, improving labour market) and the lower USD improving sentiment.                    

·         Crude oil prices fell, but prices still remain higher than a week ago. Recent price action across a number of commodities suggests the rally in recent months has largely run its course.      

Gold continued its near term bullish run, knocking out key resistance levels and touching a high of USD1,228/oz.