Daily FX Update, 10 June 2015

OVERNIGHT MARKET UPDATE:

·         In US, the May NFIB Small Business Optimism survey rose to 98.3, the second-highest reading since the recovery began almost six years ago. That outlook was endorsed by the reported 1.6% rise in April wholesale trade sales, their largest monthly gain since May 2013. Despite a 0.4% rise in inventories, the inventory/sales ratio fell back to 1.29, which points to a stabilisation in manufacturing activity. The JOLTS survey showed job openings rose to 5.38m in April – a new high for the index – and the March data were revised higher. The May NFIB survey also reported that 25% of firms had increased compensation recently. All this data is indicative of a US labour market that continues to improve and in which wages may now be starting to accelerate.  

·         The first revision to the euro area Q1 GDP data left the headline rate unchanged at +0.4% q/q. Whereas exports rose 0.6% q/q, private consumption grew 0.5% and capex rose 0.8%. The broadening in activity is an encouraging sign we may be seeing a more robust and durable upswing.

·         April trade data were better than expected with the goods deficit falling to GBP8.6 billion in April vs GBP10.7 billion in March. The deficit on goods and services narrowed sharply to GBP1.2 billion. Currency markets marked time overnight, NZD positioning squaring before tomorrow’s RBNZ drove AUD/NZD lower, counter to yesterday’s data and aided by AUD/USD mild under-performance. 

·         US Treasuries were sold off on the back of decent dataflow, with the 10-year yield up 6 bps to 2.44%.          

·         US bourse major indices were up around 0.2%, led by banks and energy shares.    

·         Crude oil prices rallied strongly overnight. US weekly crude oil inventories fell by a large 6.7 million barrels compared with expectations for a decline of less than 2 million barrels.                   

Gold prices rose as investors sought out the safe-haven metal while European stock markets slipped following the tumble in Germany’s DAX index, as uncertainty over Greece and the timing of a US interest-rate increase made investors nervous.