- US retail sales rise 0.5%, up 0.3% ex-autos; Higher gasoline sales inflate headline
- PPI rise 1.8%, core up 0.5%; Fuel, auto price rises impact
- US business inventories fall 1.0% in May; slightly more than forecast
- UK Chancellor Darling: Banks must resume lending
- UK’s Mandelson: Recession ending; public spending to be constrained for next decade; no euro membership as long as Labour in charge
- ECB’s Mersch: Rates appropriate; cutting when rates already low questionable; uncertainty surrounds mid-2010 recovery forecasts.
- Fed’s Hoenig: Economy bottoming; recovery to be very slow; Q2 growth forecasts optimistic
- French “special bond” may risk AAA: Ambrose Evans-Pritchard
- US yields rise; 10 year notes at 3.47% from 3.35%
- Stocks waffle before closing higher, up 0.5%
- Oil closes down $0.25, sheds gains to 61.50 intraday. Closes at $59.40
A very quiet session in New York. We followed the usual “risk-on/risk-off” pattern for the first few hours of trade but the dollar began to strengthen a bit on its own during the US afternoon. Stops below 1.3940 were triggered after the lunch hour, pushing the single currency as low as 1.3911. Reports of Asian central bank bids surfaced toward 1.3925.
USD/JPY firmed during the afternoon, getting a particular lift from rising US yields. Stosp were triggered above 93.40 but follow-through was limited 93.46. Large offers are seen on the approach of 93.60, traders report.
US data looked good on paper today but once you scratch below the surface, higher gasoline prices were responsible for most of the strength. That should be reversed out next month. Goldman Sach’s earning were very strong, but there was a “sell the news” reaction early in the day.
The take away from today’s market is minimal; more summer indecision. Maintain a range-trading mentality near-term.