- China cut its RRR by 50 bps over weekend
- Greek uncertainty continues with extensive talks to form a coalition government still unsuccessful
- EZ countries make contingency plans in case of Greek withdrawal from EUR
- Japan April CGPI -0.2% YoY
- RBA deputy governor sees possibility of AUD remaining high for extended period
- Australian owner-occupied housing finance +0.3% MoM
- New Zealand retail sales -1.5% QoQ
- Regional shares turn lower after early gains, now -0.4% on average
- Gold $1582/oz, Oil $95.50/bbl
There were conflicting forces at play in early interbank trade with the weekend RRR 50bps cut in China benefitting risk trades like the AUD but the ongoing political uncertainty in Greece ensuring that the EUR remained under pressure.
AUD/USD opened higher in early interbank trade, seeing highs above 1.0060, but by the time the rest of the market opened, EUR-related risk-aversion had kicked in and the AUD/USD was back near parity. There was a brief break below 1.0000 but solid corporate bids have soaked up the supply. Ranges: .9997/1.0034 (1.0065 early interbank)
EUR/USD was under pressure from the outset with the failure to form a new government increasing market angst. The first target was a barrioer at 1.2900 which held for a while before eventually giving way. The pair fell to 1.2880 quite quickly but rebounded on EUR/JPY profit taking on the Tokyo open. Some fairly heavy flows have been noted in the cross, which has held up well despite the selling and the bad news. Ranges: 1.2877/1.2929; EUR/JPY 102.95/103.41
USD/JPY took aim at trailing stops above 80.10 but the going was very slow with Japanese corporates still selling and the crosses also under pressure from risk-aversion plays. Ranges: 79.86/80.12
Cable 1.6051/78; EUR/CHF 1.2005/14
