Thursday June 5, 2008 - 21:06:32 GMT
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FX Blog- Market Snapshot Far East Open for 5 June 2008
GVI Market Snapshot- Far East Open for June 6, 2008
Profile of Key Markets:
- The USD is trading sharply lower vs. the EUR from late Wednesday levels. Markets were blindsided by a comments by ECB President Trichet after the central council meeting that hinted the central bank is considering a â€śsmallâ€ť, +25bps, rate hike after its next meeting. This half-hearted pre-announcement had the ring of a trial balloon. Perhaps the governing council wanted to test the waters politically before it moves. The last thing that a large portion of Europe needs is a policy tightening at this juncture.
- The EUR/USD is still pivoting the neutral 1.5500 line. The GBP has gained modestly vs. the USD. The EUR/GBP has gained sharply.
- As for the USD, the markets continue to respond to the verbal intervention in the U.S. currency by Fed Chairman Bernanke on Tuesday and Wednesday. The new USD policy could face a test on Friday following the May employment data.
- The USD/JPY remains higher. The EUR is up strongly vs. the JPY. The CHF/JPY has gained vs. the psychological 100 line. The CHF is lower against the EUR.
- Oil gained following early reports of a refinery explosion in Kuwait. It still closely correlated to the EUR/USD pair. Surprisingly gold is down. The AUD is steady despite stronger than expected trade data. The RBNZ kept its OCR target steady at 8.25%b but hinted at future rate cuts. The kiwi is sharply weaker.
- Asian equities ended mixed. European bourses were mixed. U.S. equities are closing higher.
- JGB prices improved, while the prices on E-Z bonds have fallen sharply after the ECB. U.S. bond prices are lower. The spread on the E-Z minus U.S. 2-yr note spread was last -212bps, -23.
- Data Friday highlights are the Canadian and U.S. May employment reports. See the GVI Calendar for the full schedule of key data.
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