- China’s April trade surplus $12.9bln vs $17.4bln
- Bernanke encouraged by stress-test outcome
- Australian budget due for release today
- Suggestions that worst is over for UK economy
- South Korea keeps rates steady at 2% for third successive month
- Regional stock markets fall, led by financial stocks
The Chinese trade surplus was much lower than anticipated due to a larger increase in imports. Commodities such as copper were imported in record amounts, suggesting that the Chinese Government are following the lead of others such as Korea in stockpiling commodities whilst prices are low and cash is plentiful! The poor performance of the 30-year Treasury auction would back up the claim that governments are looking to buy hard commodities rather than paper.
Real money funds were buying EUR/USD in large amounts during the NY session and there is talk of a large Sovereign bid at 1.3560 with plenty of trader stops below 1.3540. EUR/JPY touched technical support at 131.73 and immediately jumped 80 pips. This was despite a falling Nikkei and worse-than-expected Chinese trade numbers. Stops were triggered above 1.3610 in the EUR/USD but the follow through was poor. There are said to be decent sized offers at 1.3620/25.
The AUD has remained fairly heavy ahead of tonights budget release. Real money funds are still buying but the market is long and trailing stops are building below .7500.
Ranges: EUR/USD 1.3565/1.3615; USD/JPY 97.14/67; Cable 1.5075/1.5141; AUD/USD .7563/.7612; EUR/JPY 131.73/132.75
Markets: Sydney -1.5%, Nikkei -1%, HK -0.8%, Shanghai +0.2% and Korea -0.9%. Gold steady at $914 and crude $58/bbl.