- Euro zone flash manufacturing PMI 54.8 in May, down sharply from 58.0 in April and below median forecast of 57.4. Lowest read since last October
- ECB’s Weidmann: Must monitor closely whether seond-round effects materialise from commosity price rises
- Italy’s govt says deficit-cutting measures being brought forward to give “signal to the markets” after S&P outlook cut to negative. Govt to unveil deficit-cutting measures worth 35-40 bln in June to meet target of balancing budget in 2014 – Govt source
- Fitch analyst: No change seen at moment for outlook or rating on Italy
- Moody’s analyst: Rating outlook on Italy is stable
- Bank of Spain’s Ordonez: Central govt and regional govts must meet deficit target
- Italy May consumer morale rises to 106.5, up from 103.7 in April and better than median forecast of 103.5
- Moody’s: Bigger than expected contraction in Japan GDP credit negative
- Vote jars ruling Socialists – WSJ
- Waking up to Greece’s default position – WSJ
- Italy attacks Standard & Poors after credit downgrade – The Telegraph
Busy for a Monday. Euro zone worries, general risk aversion to the fore; European stocks, oil, US treasuries lower etc etc yada yada yada. Crap euro zone PMI data (see above) didn’t help matters.
EUR/USD down at 1.4000 from early 1.4070, having been as low as 1.3968 (100 dma seen lying in 1.3965/70 area. exact level depends on who you speak to)
Veritable who’s who seen selling EUR/USD early today; the Big German, major U.S. banks, real money, hedge funds, cta’s, sovereigns. The list was endless. Make’s you wonder who was doing the buying.
Barrier option interest was well-noted at the psychological 1.4000 level and we had the usual battle at said point, but the defence wasn’t up too much when all said and done. We eventually got down to test the 100 dma where we bounced. The euro got some support from Moody’s and Fitch both coming out and stating they were leaving their Italy outlook/ratings unchanged.
Cable down at 1.6120 from early 1.6200 against the backdrop of increased risk aversion. Bank of India seen buying in 1.6140/45 area which helped slow, but not stop, the sell-off.
We eventually got to session low 1.6107 before steadying. Reports have “retail” buy orders clustered 1.6115 down to 1.6095.
USD/CHF up at .8835 from early .8795. EUR/CHF cross sits at 1.2370, effectively unchanged on the day. But it has seen decent bounce from session low 1.2320. There have been a number of reports of the Swiss National Bank buying the cross at various times this morning.
USD/JPY effectively unchanged at 81.80, recovering from dip to 81.30. The pairing, it has to be said, is holding up pretty well considering lower US treasury yields and general risk averse backdrop.
AUD/USD down at 1.0520 from early 1.0565, having been as low as 1.0507, aussie underminned by risk averse backdrop. Talk of 1.0500 barrier option interest and we’ve seen a fairly stout defence of said level. Sell stops seen just below there.
USD/CAD marginally firmer at .9780 from early .9765 having been as high as 9797 at one stage. China was reported selling in .9780’s, which will have helped slow the advance. Buy stops seen gathering up in 9800/05 area.