Friday June 6, 2008 - 09:43:57 GMT
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FX Blog- Market Snapshot Europe Mid-Session 6 June 2008
GVI Market Snapshot- Europe Mid-Session for June 6, 2008
Profile of Key Markets:
- The USD is trading cautiously vs. the EUR from late Thursday levels. Market are still digesting the unexpected 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. Some say that the ECB probably has two rate hikes penciled in by yearend.
- The EUR/USD is still in range of the neutral 1.5500 line, although there is fresh talk about a run at 1.60 again. The GBP is modestly lower vs. the USD. The EUR/GBP is about steady. Our view is that the sharp inversion of EZ 10s vs. 2s bond yields bodes poorly for the economy down the road and the EUR.
- The new strong USD policy of Chairman Bernanke could face another test today after the May employment data.
- The USD/JPY has held roughly steady. The EUR is up further vs. the JPY. The CHF/JPY has gained. The CHF is steady against the EUR.
- Oil is advancing following the EUR/USD gains yesterday. It is still closely correlated to the EUR/USD pair. Gold has rallied following a lackluster session on Thursday. The commodity currencies are steady.
- Asian equities ended mixed to higher. European bourses are better. U.S. equities are currently seen opening steady later.
- JGB prices fell today, while the prices on E-Z bonds are mixed after having fallen sharply after the ECB. U.S. bond prices are higher. The spread on the E-Z minus U.S. 2-yr note spread was last -213bps, -1.
- 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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